Bring windfall tax, reduce VAT, level-up social security at inflation level: Usdaw

Retail trade union Usdaw is calling on the government to take immediate action to tackle the growing cost of living crisis, as inflation reaches a 40 year high and wages continue to be devalued by rising prices.

The Retail Price Index increased to 11.1 percent and the Consumer Prices Index reached 9 percent. Usdaw’s view is that RPI is a more accurate measure of inflation, particularly as it incorporates housing costs. 

Pointing out that regular pay excluding bonuses dropped by 2.9 percent in March as per the Office for National Statistics (ONS) data, Usdaw has urged the government to announce an emergency budget.

The “emergency budget” should include a windfall tax on the huge profits of North Sea oil and gas producers, to protect the most vulnerable from rising energy bills, reduction of Value Added Tax (VAT) from 20 percent to 17.5 percent, and an increase to all social security payments by at least the level of inflation, Usdaw said.

Paddy Lillis – Usdaw General Secretary says, “The government is clearly out of touch with the real lives of low-paid working people, as last night Conservative MPs voted down Labour’ proposal for a windfall tax. They chose to protect the huge profits of oil and gas producers, against helping workers who are struggling to make ends meet, on the day that evidence shows that wages are falling and ahead of news of raging inflation.

“Today Tory MPs have the opportunity to do the right thing and back Labour’s proposal for an emergency budget. There is a clear need for government intervention to support people claiming in-work welfare payments and we call for an immediate increase to all social security payments by at least the level of inflation. This should be followed by an urgent and fundamental overhaul of Universal Credit to ensure it provides a social security benefit that supports claimants.

“However, the cost of living crisis is clearly affecting all low paid workers, not just those in receipt of in-work welfare payments. Too many are struggling to pay their energy bills and it is clear that the Government can take action to tackle this through a windfall tax on North Sea oil and gas producers.

“Also, to ensure that any action delivers the greatest benefit for those most in need, Usdaw is calling for the Government to reduce VAT to 17.5 percent. VAT is generally accepted to be a regressive tax, so a reduction in the rate is needed to look after the interests of low income households.

“The government has so far stood back as their cost of living crisis rages. If they continue to fail to take the action we are calling for, the Government will have simply failed to understand the scale of the challenge faced by millions of workers across the country.” 

As per Usdaw’s cost of living survey of over 6,500 workers,  two-thirds have relied on borrowing to pay their everyday bills, with around half of them struggling with repayments.

82 percent of working parents feel worse off now than they did last year, more than a quarter of all parents have missed meals in the last year to pay bills, says the survey, adding that two-thirds are significantly cutting down on heating in order to cope while a quarter will no longer use the heating at all.