FORMER prime minister Gordon Brown has demanded the UK Government come up with an emergency budget before a “financial timebomb” in October pushes millions into poverty.
After a new report commissioned by Brown suggested Government help has failed to address households’ needs, he said the Prime Minister, Rishi Sunak and Liz Truss must agree to emergency measures “this week”.
It comes as Truss vowed to immediately cut taxes to tackle the cost of living crisis if she is made Prime Minister, which her competitor Sunak claims will fuel inflation.
The two candidates vying to replace Boris Johnson as prime minister continue to clash over their plans to help households with spiralling bills after the Bank of England warned that the UK would fall into the longest recession since the financial crisis, with inflation set to soar to more than 13%.
And, both have faced calls from former PM Brown to act and bring in emergency measures.
Writing in The Observer, he said: “A financial timebomb will explode for families in October as a second round of fuel price rises in six months sends shockwaves through every household and pushes millions over the edge.
“A few months ago, Jonathan Bradshaw and Antonia Keung at York University estimated that April’s 54% increase in fuel prices would trap 27 million people in 10m households in fuel poverty.
“Now, 35 million people in 13m households – an unprecedented 49.6% of the population of the United Kingdom – are under threat of fuel poverty in October.”
Brown said if an agreement was not drawn up by Johnson, Sunak and Truss then “parliament should be recalled to force them to do so”.
The new report, carried out by Professor Donald Hirsch at Loughborough University, found support for low-income households has fallen short of offsetting the losses they face amid the cost-of-living crisis, with some families up to £1600 worse off a year.
The additional £1200 offered to the poorest in society this year will fail to compensate for three major blows to their income from October 2021 to October 2022, the analysis suggests.
The loss of the £20-a-week benefits uplift, an annual uprating out of line with inflation forecasts, and a jump in the energy cap will mean the worst-off families cannot bridge the gap.
This is because the flat-rate payments offered by the Government fail to take into account the different sizes and needs of different households, it says.
A Government spokesperson said: “We understand that people are struggling with rising prices, which is why we have acted to protect the eight million most vulnerable British families through at least £1,200 of direct payments this year, with additional support for pensioners and those claiming disability benefits.
“Through our £37 billion support package, we are also saving the typical employee over £330 a year through a tax cut in July, allowing people on Universal Credit to keep £1,000 more of what they earn and cutting fuel duty by 5p, saving a typical family £100.”
The report comes amid growing calls for the new PM to urgently increase the amount of support available to the most vulnerable families, with Truss continuing to put her focus on reducing taxes.
She wrote in The Sunday Telegraph: “Despite the Bank of England’s stark assessment this week, I do not believe in resigning our great country to managed decline or accepting the inevitability of a recession.
“I would hit the ground running by bringing in an emergency budget, charting a firm course to get our economy growing in order to help fund our public services and NHS.
“I would use this to immediately tackle the cost-of-living crisis by cutting taxes, reversing the rise on national insurance and suspending the green levy on energy bills.”
The Foreign Secretary earlier insisted tax cuts, not “handouts”, would help families with skyrocketing fuel bills this winter.
Sunak hit back at her comments, saying: “It’s simply wrong to rule out further direct support at this time as Liz Truss has done, and what’s more, her tax proposals are not going to help very significantly people like pensioners or those on low incomes who are exactly the kind of families that are going to need help.”
Trade minister Penny Mordaunt, who is backing Truss, denied that the Foreign Secretary has ruled out extending direct payments to people claiming it was a "misrepresentation".
She told Sky News: "What she is looking at though is enabling people to keep more of the money that they earn.
“It makes no sense to take money off of people and then to give it back in very, very complicated ways.
“We need to simplify this and we need to ensure that households are as resilient as possible and stopping taking large sums of tax on people is one way of doing that.”
Tory MP Damian Hinds conceded the package of support Mr Sunak drew up as chancellor was not enough in these “extraordinarily difficult times”, and suggested more would come if he becomes prime minister.
The supporter of Sunak told Sky News: “Things have been getting worse even since that was put into place in terms of projections for energy bills are going to be in future and he’s been clear that more may well be needed and he is ready to do that as required.”
