John Healey delivered a “scattergun” budget that did little to boost living standards and left Britain facing “a painful second half” of the parliament, a leading economic thinktank has warned.
The Resolution Foundation said on Thursday that measures to ease household gas and electricity costs would still leave energy bills higher this year than during the last energy shock.
In a highly critical verdict on the chancellor’s efforts to provide “breathing space” for the public amid the rising prices exacerbated by the Iran war, the foundation said Healey’s budget was poorly targeted, giving the rich almost as much as the poor.
It said the subsidies to ease the rising cost of living handed the poorest half of households a gain of £158 on average this year and next, just £14 more than the £144 received by the richest half.
The thinktank’s chief executive, Ruth Curtice, said it highlighted “a complete failure to target help at those who need it most”.
In his first budget as chancellor, Healey said he would cushion the blow from rising inflation while also showing how the government plans to “rewire the economy” to boost growth.
Measures aimed at tackling soaring energy costs include the scrapping of standing charges on gas bills and energy payments of £100 for up to 20m households in council tax bands A to D.
But in its analysis of the budget, the foundation said Healey was the latest chancellor to preside over a poorly targeted energy discount scheme that has “left the UK reliant on 35-year-old property valuations to determine eligibility for support with energy bills this winter”.
Typical disposable incomes would fall by £1,050 between now and the end of the parliamentary term in 2028-29, limiting the increase over the entire five-year parliament to just £600, the foundation predicted.
Curtice said: “Faced with a tough backdrop amid global economic turmoil, the chancellor delivered a scattergun budget that did little to address the sharp challenges facing Britain.
“Cost of living support is being spread far too thinly and will leave even those families receiving help facing higher energy bills than they did during the last energy price shock.”
Healey said the UK was being battered by a global economic storm, with the budget watchdog – the Office for Budget Responsibility – slashing its forecast for gross domestic product growth next year.
But he promised “to steer us through the global economic storms today, to chart a new course for Britain in the years ahead, to give people fresh hope for Britain’s future”.
Curtice said: “Stepping back, this parliament is increasingly looking like one of two halves, which yesterday’s budget did little to address.
“The first half has been marked by rising living standards, solid economic growth and extra funding for public services – funded by huge tax rises – none of which was enough to prevent dramatic half-time substitutions in Downing Street.
“The new occupants will hope for better political fortune in the second half, but it could prove tough going against a projected £1,000 fall in disposable incomes.
“A more dramatic change of tactics may be needed, and we did not learn how the government will choose between public service ambitions and household incomes. Next year the choices will unavoidably get starker.”
Healey also included tax breaks for high street businesses as well as hiking taxes on banks and gambling.
Defending the budget measures, Andy Burnham told broadcasters: “It’s pretty bold to help 20m households with energy costs through the council tax cut this winter.
“It’s bold to lift 70,000 businesses out of business rates altogether, and that will give a real lift to high streets up and down the country.”
