Coronavirus in numbers

NHS families facing ‘quadruple hammer blow’ totalling more than £1,000, Labour warns

‘Economically illiterate’ squeeze on spending power could slow recovery from pandemic, says Dodds

Andrew Woodcock
Political Editor
Saturday 27 March 2021 16:05

Families of NHS staff could find themselves as much as £1,170 worse off next year as a result of decisions taken by Boris Johnson’s government, Labour has claimed.

Shadow chancellor Anneliese Dodds branded the situation a “quadruple hammer blow”, resulting from a below-inflation pay offer, increased council tax, reductions in universal credit and the freezing of income tax thresholds.

While the decisions will hit different households to varying degrees, Ms Dodds said that many will be more than £1,000 worse off.

She also warned the recovery from Covid-19 could be slowed by the “economically illiterate” decision to reduce household spending power at a time when the UK is relying on consumer spending to revive post-pandemic high streets.

Chancellor Rishi Sunak has exempted NHS staff from the pay freeze imposed on all public sector workers earning more than £24,000 this year.

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But Ms Dodds said that the 1 per cent offer – which is soon expected to be overtaken by inflation – represented a cut from the 2.1 per cent envisaged in the NHS Long-Term Plan of 2019.

Meanwhile, many lower-paid workers stand to lose the £20-a-week uplift in universal credit introduced as an emergency measure when coronavirus hit the UK and due to be withdrawn in October. 

Council tax bills will rise by up to 5 per cent in April after Mr Sunak raised the previous 2 per cent maximum limit by which town halls can hike the levy without triggering a local referendum.

The freezing of income tax thresholds from April 2022 will also drag more of workers’ earnings into the levy.

Labour calculated that the kind of worker who would lose out to the full £1,170 would include a newly qualified nurse living with their partner and two children in an area such as Swindon, where the local authority is planning to put council tax up by the maximum amount.

Ms Dodds said: “Rishi Sunak’s mask slipped at the Budget. Instead of protecting Britain’s families during a pandemic, he hit them with a quadruple hammer blow to their pockets that will leave them over £1,000 worse off next year.

“That’s not just wrong – it’s economically illiterate. If families have less money to spend, then businesses will suffer and the recovery will take longer.

A Treasury spokesperson said: “Millions of people would be unemployed without our support package, which has been one of the most generous in the world, and our Plan for Jobs will continue to support families and businesses during the next stage of our economic recovery.”

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