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State pension ‘faces biggest real-terms cut in half a century’

State pension 'faces biggest real-terms cut in half a century' 2

Rishi Sunak was branded ‘Mr Tax’ today as he was accused of overseeing the biggest real-terms fall in the state pension for half a century.

Labour analysis suggested the decision to downgrade the ‘triple lock’ amid soaring inflation will mean a £427 hit this year. 

The policy has ensured that the payouts rise each year in line with whichever is highest out of CPI, average earnings, or 2.5 per cent.

However, the policy was suspended for 2022/23 after wage growth spiked as the country emerged from the pandemic. As a result the state pension will only go up 3.1 per cent next month.

In contrast, inflation is expected to be 6.2 per cent at the time of the uprating and average just under 8 per cent over the next 12 months. 

Labour calculated that in real terms the £9,648 state pension will be worth £427 less. 

Shadow work and pensions secretary Jonathan Ashworth said the Chancellor had ‘room for manoeuvre’ in his mini-Budget last week, and derided his claims to be cutting taxes.

The Treasury is already thought to be putting together another cost-of-living bailout after Mr Sunak’s personal ratings slumped to a record low in the wake of the Spring Statement.

He was accused of being an ‘illusionist’ last week as he hailed his ‘tax-cutting’ Spring Statement, despite the burden being on course to reach the highest level since the 1940s.

Rishi Sunak was branded 'Mr Tax' today as he was accused of overseeing the biggest real-terms fall in the state pension for half a century (Sunak pictured at Downing Street today)

Rishi Sunak was branded ‘Mr Tax’ today as he was accused of overseeing the biggest real-terms fall in the state pension for half a century (Sunak pictured at Downing Street today)

Shadow work and pensions secretary Jonathan Ashworth said the Chancellor (pictured today) had 'room for manoeuvre' in his mini-Budget last week, and derided his claims to be cutting taxes

Shadow work and pensions secretary Jonathan Ashworth said the Chancellor (pictured today) had ‘room for manoeuvre’ in his mini-Budget last week, and derided his claims to be cutting taxes

The government’s own watchdog has predicted that this year will see the biggest fall in disposable incomes since records began in the 1950s.  

Mr Ashworth told Ridge On Sunday on Sky News: ‘Rishi Sunak absolutely had more room for manoeuvre in this spring statement and mini budget, but rather than acting in the interests of the British people, he was playing games.

‘He was acting in his own interest because he thinks by offering an income tax cut in two years that’ll help him politically with Conservative MPs if there’s a leadership contest or that’ll fit the Tory election grid.

‘I don’t believe that putting 1.3million people into poverty because you’re imposing a very severe real-terms cut to universal credit, you’re imposing the biggest cut to the pension in 50 years, is fair.’

inflation is expected to be 6.2 per cent at the time of the state pension uprating next month. Labour calculated that in real terms the £9,648 payout will be worth £427 less than this year

inflation is expected to be 6.2 per cent at the time of the state pension uprating next month. Labour calculated that in real terms the £9,648 payout will be worth £427 less than this year

State pension 'faces biggest real-terms cut in half a century' 3

Shadow work and pensions secretary Jonathan Ashworth said the Chancellor had 'room for manoeuvre' in his mini-Budget last week, and derided his claims to be cutting taxes

Shadow work and pensions secretary Jonathan Ashworth said the Chancellor had ‘room for manoeuvre’ in his mini-Budget last week, and derided his claims to be cutting taxes

An Opinium poll found Mr Sunak, once among the most popular members of the government, has seen his ratings tumble into negative territory for the first time

An Opinium poll found Mr Sunak, once among the most popular members of the government, has seen his ratings tumble into negative territory for the first time

Rishi ‘already putting together new cost-of-living bailout’ 

Rishi Sunak is already putting together another cost-of-living bailout after his personal ratings slumped to a record low in the wake of the mini-Budget.

The Chancellor has tried to calm anger over soaring inflation and energy bills promising the government ‘will continue to stand by your side’.

But amid claims of tensions with Boris Johnson the Treasury is already said to be assembling another bailout, with council tax identified as the best mechanism for helping families. 

In interviews this morning, Education Secretary Nadhim Zahawi stressed there is a ‘global battle’ against inflation but admitted it was not ‘job done’ for Mr Sunak. 

‘He’s put £22bn for one year of help… I think he will continue to keep an eye on this,’ he said. ‘It would be absolutely irresponsible to say ”job done”.’ 

Mr Sunak was accused of being an ‘illusionist’ last week as he hailed his ‘tax-cutting’ Spring Statement, despite the burden being on course to reach the highest level since the 1940s. 

The inflation rate is expected to average nearly 8 per cent over the coming year, but benefits will only be uprated by 3.1 per cent in April as the mechanism used is retrospective. 

Mr Ashworth said Mr Sunak should have imposed a ‘windfall tax’ on the profits of oil and gas companies to generate funds to help struggling families and pensioners with energy bills.

He said: ‘He chose not to do that.

‘Instead, he’s imposed these very punishing tax rises, these very severe real-terms cuts to the pension and support like universal credit, and he’s expecting people to be grateful because two years down the road he’s saying there’s going to be an income tax cut even though that income tax cut nowhere near offsets the 15 tax rises that he has imposed on the British people, £3,000 extra per household if you do a rough and ready calculation.

‘He is a tax-rising Chancellor, he is Mr Tax and it’s the British people who are paying the price.’

An Opinium poll found Mr Sunak, once among the most popular members of the government, has seen his ratings tumble into negative territory for the first time.

Research carried out after the mini-Budget showed 35 per cent disapprove of his performances, compared to 31 per cent who approved.

The net figure of minus four was a drop of 15 points from a fortnight ago, and compares to Mr Sunak’s previous low of plus seven in October last year. 

The political toxicity of the cost-of-living crisis was underlined last week in a presentation by Tory election strategist Michael Brooks to No10 staff.

It suggested the issue had ‘shot up’ and overtaken the NHS as the most important issue.

‘The cost-of-living issue is a train about to hit us,’ a source told the Sunday Times.

In February Mr Sunak gave a rebate of £150 to those living in properties in council tax bands A to D, and a £200 reprieve on energy bills, to be paid back over five years.

Writing in the Sun on Sunday, Mr Sunak said: ‘I know people are deeply anxious about making ends meet.

‘While we can’t completely shield everyone from the global challenges we face, we can, and will, help you deal with these rising costs.’

The respected IFS think-tank has highlighted the huge hit to people's finances as the Chancellor tries to balance the books after Covid

The respected IFS think-tank has highlighted the huge hit to people’s finances as the Chancellor tries to balance the books after Covid  

State pension 'faces biggest real-terms cut in half a century' 5

The OBR's assessment last week underlined that the tax burden is soaring to a level not seen since the 1940s

The OBR’s assessment last week underlined that the tax burden is soaring to a level not seen since the 1940s 

Mr Sunak's wife Akshata collected a Deliveroo package from outside No11 today

The Sunak family treated themselves to a takeaway after his mini-Budget efforts last week

Mr Sunak’s wife Akshata collected a Deliveroo package from outside No11 today

Rishi Sunak was branded 'Mr Tax' today as he was accused of overseeing the biggest real-terms fall in the state pension for half a century

Rishi Sunak was branded ‘Mr Tax’ today as he was accused of overseeing the biggest real-terms fall in the state pension for half a century

He added: ‘I cannot pretend that we can completely protect people from the difficult and uncertain times ahead.

‘But this government will continue to stand by your side and do all that we can to support you.’ 

One former Tory Cabinet Minister told the Mail on Sunday that Mr Sunak’s ‘political stock has fallen hugely’ and suggested Mr Johnson should consider moving him in a future reshuffle. 

The ex-Minister also called on the Chancellor to reverse the controversial rise in National Insurance.

He also said Mr Sunak’s promise of a future cut in the basic rate of income tax by 2024 was too transparently ‘political’, adding: ‘It almost made him look shifty.’

However, some ‘Red Wall’ Tories sprang to Mr Sunak’s defence yesterday. Leigh MP James Grundy said: ‘For people at the sharp end in Red Wall seats, the Chancellor has delivered a remarkable amount given the limited leeway he had.’

He said the decision to raise the NI threshold by £3,000 and other measures would deliver an extra £1,600 a year to a single person on the minimum wage with two children.

He added: ‘That will make a massive difference for those who struggle to make ends meet.’ 

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