nearly a third to over one million this spring. Here, destitution is defined as an inability to buy basic essentials, and therefore, the NIESR is urging ministers to reconsider the tax increase, as households budgets continue to face mounting pressure amid rising inflation, higher energy bills and a greater tax burden.
In a report, the institute pointed out that the lowest-income households were facing the biggest impact of cost-of-living pressures since they spend a significant proportion of their income on food and fuel. It accused the government of “powering down, not levelling up”, noting that these households are “heavily concentrated in some of the most economically deprived areas of the country, including parts of the north-west, Wales and pockets in London and the south-east”.
NIESR director Jagjit Chadha further pointed to the effects of the premature withdrawal of the government’s Covid-19 support measures on the BoE’s ability to tackle price pressures, claiming that the central bank has been forced to maintain ultra-low interest rates to addressing hardship among poorer households, when financial protection should be the Treasury’s job. “The government has chosen to tighten primarily through fiscal policy, leaving monetary policy lagging the inflation cycle. This policy sequencing is the wrong way round,” he said.
