Tory minister challenged over claims budget will leave the public £500 better off a year

The Treasury minister was challenged for claiming the budget would leave the public £500 better off a year.

Financial secretary to the Treasury and Conservative MP, Lucy Frazer, came under fire on BBC Question Time on Thursday night after she claimed Brits would be significantly better off after the chancellor’s budget this week.

Citing an increase to the national living wage and cuts to the taper rate of universal credit, Frazer said the budget was a good one for low income homes.

“The budget does significant amount to help those on lower incomes,” she told the audience and panel.

“What we haven’t talked about this evening yet is a host of other measures that are some are already in place to help those on the lowest incomes.”

The national living wage has been increased by 6.6% to £9.50 meaning full-time workers on the wage will take home an extra £1,000 per year.

For universal credit, the taper rate – i.e the amount of money claimants lose from their payments per pound they earn – has been reduced from 63p to 55p.

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However, about 4.4 million families have experienced a cut to universal credit, which compares to around two million workers on national living wage, as only around 40% universal claimants work; many do not due to chronic illnesses or disabilities.

Furthermore, while national living wage is increasing, it comes at a time of tax rises, soaring household bills, inflation, and the end of the furlough scheme – which experts warn will leave the most financially vulnerable facing a dire winter.

Frazer was challenged by economist Miatta Fahnbulleh, chief executive of the the New Economics Foundation (NEF), over her claims.

“The Office for Budget Responsibility doesn’t say that in its figures, the Institute for Fiscal Studies doesn’t say that in its figures, the Resolution Foundation doesn’t say that in its figures,” said Fahnbulleh.

“They’re all very consistent that: living standards are going to get worse," she added.

"You can always fiddle with figures to try and get you to where you want to, but when you have all the experts saying one thing… I don’t know, I’ll go with the experts.”

Miatta Fahnbulleh NEF BBC Question TIme
Economist Miatta Fahnbulleh said experts had been 'consistent' that living standards after the chancellor's budget were set to get worse. (BBC)

The response by experts to Rishi Sunak's budget has been unambiguous for low income households.

Chief executive of the Resolution Foundation, economist Torsten Bell, said the budget left the poorest with “nothing”.

"This is helping better off universal credit claimants – the poorest (who generally aren’t working) get nothing to compensate for £20 cut," he said.

In their post-budget analysis, the Resolution Foundation also warned that the UK is “still in the midst of its weakest decade for pay growth since the 1930s”, and that the government is building a “high-tax, big-state economy”.

“Higher taxes aren’t a surprise given the UK is combining fiscal conservatism with an ageing society and a slow-growing economy,” said Bell.

“But it is the end of low-tax conservatism, with the tax take rising by £3,000 per household by the middle of this decade.”

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The IFS were also unambiguous, warning of a “squeeze in living standards” for “large swathes of the population”.

"A group who are likely to find the coming months especially tough are households without someone in paid work," they said.

"Prices are set to continue rising relatively quickly over the winter while their benefits stay the same, and while many will still be adjusting to the removal of the temporary £20 per week benefit uplift.”

And chief executive of homeless charity Shelter, Polly Neate, described the budget as a "missed opportunity" at a time when 91 households are becoming homeless per day in England alone.

A Universal Credit sign on a door of a job centre plus in east London. Recipients of Universal Credit (UC) have described feeling
The government's changes to universal credit will only benefit less than half of claimants (PA Images)

“While the government’s benefits support for people in work will provide a vital lifeline for some, it won’t help everyone in need," she said.

"The months ahead are going to be very hard with soaring food and energy prices on top of extortionate and rising rents.

"If struggling families are to stand a chance at recovery, the government has to build decent social homes - it is the only solution to homelessness that will last.”

When asked about Frazer's comments, a Treasury spokesperson said: “The government is taking targeted action worth more than £4.2bn a year to help families with the cost of living, and our Plan for Jobs is supporting living standards by getting people into work and helping them progress.

"Our analysis shows that this government’s decisions have been worth nearly £500 per year extra to households on average, and more than £1,000 for the poorest households – and that’s before factoring in wage growth, including the 6.6% rise in the national living wage."

Watch: What are the key takeaways from Rishi's budget?