Co-op Party condemns Sunak budget as missed opportunity

The Co-op Party and Locality say government needs to do more to restructure the ownership of the economy

Rishi Sunak’s spring budget, announced on 23 March, met with a hostile reception from the press and opposition, amid warnings from the Office of Budget Responsibility of a record fall in living standards.

Set against a backdrop of rising inflation, a reduced growth forecast, the aftermath of the Covid-19 crisis and the invasion of Ukraine, Mr Sunak’s plans include a 5p cut in fuel duty and an increase in the National Insurance threshold

The Employment Allowance, which gives relief to smaller businesses’ National Insurance payments, will rise from £4,000 to £5,000 from April. Small businesses will also get business rates relief.

Homeowners installing energy efficiency materials – such as solar panels, heat pumps or insulation – will see VAT cut on these items from 5% to zero for five years. Green technology will also be exempt from business rates from April 2022, which the government says is expected to be worth around £170m over the next five years to support the decarbonisation of buildings – an area where several co-op businesses are active.

A 100% relief for eligible low-carbon heat networks which have their own rates bill will also be available.

But the Co-op Party condemned the budget, saying Mr Sunak had failed “to confront the worst cost-of-living crisis in a generation and help support the UK’s economic recovery from the pandemic”.

Policy officer Daniel Monaghan added: “As prices rise and impact people and businesses across the country, meaningful action was desperately needed to help support those who are struggling to make ends meet.

“This statement did not go nearly far enough to provide the security of a warm home, food on the table and a fair wage to millions across the country. We’re facing fundamental challenges to our energy security, food security and economic security – challenges to which this statement failed to rise.”

Mr Mongahan said the war in Ukraine had given new urgency to issues around energy security and the need to invest in “cheap, clean renewable energy produced and owned right here in the UK.”

He added: “That’s why we welcome the government’s move to bring in our longstanding policy of zero-rating renewable energy products like solar panels and wind turbines.”

But the cost of installing solar panels or turbines is still too high, he warned, and community energy schemes “which enable communities to club together to build and generate their own electricity” need more support.

“Unfortunately,” he said, “the government is allowing its only financial support for the community energy sector to lapse later this month. As part of our energy plan, we’re calling for a new National Community Energy Fund, so that more people can take advantage of the opportunities presented by the transition to renewable power. Without that support, the benefits of zero-rating won’t reach those communities who need it most.”

Mr Monaghan also called for more measures on food poverty, as inflation hits living standards leaving “more and more people facing the dire choice between heating and eating”.

He said the Party has called for “a Right to Food … to help ensure that no one goes hungry. Instead, the government missed an opportunity to better target support at low earners or those in receipt of Universal Credit, who are turning up at food banks in ever increasing numbers.”

And he said the budget contains no measures to grow the co-operative sector.

“At the Co-operative Party, we know ownership is at the heart of sharing power and wealth. An effective way to do this would be by committing to grow the co-operative economy and help ensure more businesses can be owned by workers, consumers and communities – but this was another area that the government overlooked.

“In the short-term, the policies announced today did not go far enough to provide the security of a warm home, food on the table and a fair wage to millions across the country. But in the long-term too, very little vision was provided on how we can create an economy with greater security, fairer ownership and higher growth – to help move towards an economy where power and wealth are shared.”

Tony Armstrong, CEO of community business charity Locality, said: “The chancellor rightly points out that what people want in these testing times is to feel secure, but the question is what will really offer that security. The measures announced today fall well short.

“To really feel secure, people want to know that there are others around them who have their back. Community organisations play exactly this role. These local groups and businesses have spent the last two years on the front line of the response to Covid and are now facing new and frankly terrifying demands from all sides, as the people who rely on them see their food, energy and other bills skyrocket.

“Community organisations are concentrated in the places most in need of ‘levelling up’, and our recent research showed their extraordinary resilience during the pandemic. They are our country’s vital first responders, but they could do so much more if the government just trusted them to act.

“That means making the money the government is spending on its levelling up agenda more accessible to community organisations. 

“Recent funding streams have been too centralised and bureaucratic. By making future funds more flexible and decentralised, the government can truly put communities in charge”

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