Autumn Budget 2021: SNP calls for Rishi Sunak to U-turn on proposals following household income warning

The SNP has called on Chancellor Rishi Sunak to U-turn on his Budget proposals following a warning from the Office for Budget Responsibility (OBR).

Speaking at the Treasury Committee on Monday, OBR official Sir Charlie Bean predicted real household disposable incomes would not reach pre-pandemic levels until the end of 2023 following the Chancellor’s announcement last week.

Treasury officials warned the amount of wiggle room for the Chancellor to cut the deficit in the next three years and reduce national debt was the second-smallest level on record.

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Mr Bean also described UK productivity growth as “modest” and not “anything like the pre-pandemic rates”.

Chancellor of the Exchequer Rishi Sunak leaving 11 Downing Street, London before delivering his Budget to the House of Commons

The SNP urged the UK Government to deliver a major financial package to help boost incomes and reverse rising poverty levels across the UK.

Mr Bean said: “Central to raising living standards going forward will be raising productivity growth. We don’t have real household income getting above pre-pandemic levels until the back end of 2023, and then it’s growing at a pretty mediocre rate from there until the end of the forecast period.”

SNP shadow chancellor Alison Thewliss said: “The Chancellor’s Budget has left us in no doubt that, under Westminster control, Scotland will not be able to deliver a fair recovery from the pandemic.

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“The SNP demanded a radical and progressive package that would boost incomes and tackle rising poverty levels, which would have included reversing the Universal Credit cut, delivering a multi-billion-pound Brexit Recovery Fund, and offering a meaningful pay rise to public sector workers to offset a decade of Tory cuts.

"None of these calls were delivered by the Chancellor and it will now be those on the lowest incomes who will suffer the consequences."

She added: “Today’s comments from Sir Charlie Bean clearly shows that the cost-of-living crisis we are currently facing is here to stay. Only with an investment-led recovery will the UK be able to tackle this crisis – not by making champagne cheaper and hiking taxes on the countries poorest.

“The Chancellor must listen to these concerns and U-turn on his Spending Review plans – plans that will leave millions of people across the UK thousands of pounds worse off.”

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The economic forecasters said they also feared public transport may face a permanent black hole in its finances without service cuts as passenger numbers remain below pre-pandemic levels.

In a two-hour grilling by MPs on the details of Mr Sunak’s Budget, OBR chairman Richard Hughes also suggested the Treasury may struggle to hit its new deficit targets, especially if interest rates rise, and would be in for a “wild ride”.

He said: “The Chancellor set himself some new fiscal rules in this budget and they are to get debt falling as a share of GDP [gross domestic product] by 2024/25 and balance the current budget.

“The headroom he set aside to reach those targets is the second-lowest headroom that any Chancellor has had when setting fiscal rules.”

He added: “Just a 1 per cent interest rate rise could easily wipe out the Chancellor’s headroom.”

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