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Blog, Briefings, COVID-19, Economy, Environment, International Development, Politics and Elections, Poverty and Inequality, Universal Credit · 4 March, 2021

Reaction to the Budget

In this Budget, the Chancellor faced the difficult task of setting financial and economic priorities at a time when unprecedented support has been needed, and continues to be needed, to help the country get through the pandemic. As well as setting out plans for the extension of that support, he had to address the need to restart the economy, ensure the sustainability of public finances, and tackle long-term challenges such as climate change.

Here, analysis of how the Budget measures will affect some of the areas of particular concern to the Churches is offered by policy specialists from the Joint Public Issues Team of the Baptist, Methodist, United Reformed Churches and the Church of Scotland.

Coronavirus support: vital extensions

The extensions to the furlough scheme, expansion of other coronavirus support schemes, and continuation of the £20 a week uplift in Universal Credit are all welcome and necessary measures. They will be a crucial support to many individuals, families, charities and businesses over the coming months as Covid restrictions continue.

Universal Credit: uplift to end in September

Looking ahead, the Chancellor announced that from September the Universal Credit uplift will come to an end. This means the lowest income families will face a cut of £20 a week or over £1,000 a year from September. Universal Credit supports people in low-paid jobs, those looking for new employment and those who can’t work due to illness or disability. These are the very people who have been hit hardest financially by the pandemic and for whom the jobs market looks bleak. Even with an increase to the minimum wage, withdrawing this support will push many into poverty, and cannot be right.

Debt: no provision for families weighed down by debt

People on low incomes are also those who are most likely to have needed to borrow simply to make ends meet over the past year. Over 6 million families are behind on bills because of the pandemic, and the best estimate is that families have needed to take on £10 bn in additional debt.

The Churches, as part of the Reset the Debt campaign, have asked the government to put a strategy in place to address this household debt crisis, and proposed a Jubilee Fund to support low-income families who have been forced to borrow by the lockdown. The Budget was a missed opportunity for the Chancellor to address this issue. There are real concerns for the welfare of families trapped by lockdown debt, facing a difficult jobs market and now a reduction in Universal Credit.

Climate change: beyond the headlines

The Chancellor touted the budget as laying the foundations for a greener economy and providing a stimulus for decent, well-paid, green jobs. The incorporation of the net-zero target into the remit for the Bank of England’s monetary and financial policy committees is significant, and the establishment of a National Infrastructure Bank to support a green revolution is welcome, though financial backers of new green technology will need confidence that the payback from green investment works from both financial and climate perspectives.

However, the headline green initiatives mask a failure to address the fundamental changes that are needed to transition to a green and just economy. The freeze on fuel duty, and pegging the Carbon Price Support rates at £18 to 2023, suggest this commitment is half-hearted. The ‘super deduction’ tax break scheme that allows businesses that are investing in new equipment to reduce their tax bill is available regardless of whether that investment is directed towards environmentally damaging economic activity or towards green investment.

International development: breaking promises

While the Chancellor made much of the Budget delivering on promises, the Government still seems intent on breaking its manifesto commitment to spend 0.7% of national income on international development – breaching a promise made to the electorate and the world’s poorest people. The implications of this decision will be felt in some of the most vulnerable communities of the world. For example, this week the UK announced it was halving the support it gives to humanitarian work in conflict-torn Yemen, despite the UN Secretary-General warning’s that cutting aid would be “a death sentence”. The UK is the only G7 country to be reducing its overseas aid commitments at a time when the pandemic has pushed 150 million people worldwide into extreme poverty.

Rethinking priorities: From recovery to flourishing

As we begin to emerge from the coronavirus crisis, an economic recovery programme that is primarily focused on seeking financial growth and keeping businesses afloat regardless of the cost to the wellbeing of community and creation will not address many of the long-term concerns we have as Churches. We need a recovery that is productive, inclusive and resilient. Decisions around government spending must prioritise the urgency of the climate crisis while also supporting and strengthening local communities, and we look forward to contributing to discussions about the future.

Read our vision for how the economy could be re-shaped to enable the wellbeing of all people and the planet: From Recovery to Flourishing.

Filed Under: Blog, Briefings, COVID-19, Economy, Environment, International Development, Politics and Elections, Poverty and Inequality, Universal Credit

Simeon Mitchell

I became interim JPIT Team Leader in April 2021, and have the privilege and responsibility of coordinating the work of the team. I was previously Deputy Team Leader, and have been Secretary for Church and Society for the United Reformed Church since January 2018. My background is in international development and enabling Christians and churches to respond to issues of global poverty and injustice. I live in Oxford with my wife and three children, and am a preacher and lay leader in my local church.

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