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‘More people will fall into debt this winter’ – council leader’s warning to Truss

The Labour leader of Barnet Council has urged Prime Minister Liz Truss to rethink last week’s ‘mini-budget’ – warning that it “gambles with people’s livelihoods”.

Barry Rawlings called for more support for squeezed local authorities and residents – including 9,500 households in debt to the council – claiming there was “virtually nothing in the mini-budget to rebuild public services” and that it would “deepen inequality”.

In a letter to the Prime Minister, who took office earlier this month, the council leader warned that without “immediate action” from the Government, more people could fall into debt during the winter as the cost-of-living crisis deepens.

Chancellor Kwasi Kwarteng last Friday announced a raft of tax cuts that he claimed were designed to boost economic growth.

But the cuts, combined with plans for large-scale borrowing, sparked a fall in the value of the pound, pushing up the cost of imported goods. It also stoked fears that the Bank of England would hike interest rates to offset inflation, which would increase the cost of repaying mortgages and other debt.

Council data shows that around 9,500 Barnet households who owe money to the local authority have multiple debts of more than £1,000. But the Labour administration warns the total number of households in need of support within the borough, including those with other debts, will be “much higher”.

In the letter to the PM, Cllr Rawlings sets out measures the council is taking to support residents and businesses, including setting up a £2 million fund to provide financial support, a council tax refund and a cost-of-living information hub. But he warns that the council’s ability to respond to the crisis is “limited” and that it has “very few levers to alleviate these growing pressures”.

Cllr Rawlings adds: “Without immediate action from the Government to assist us with more funding and flexibilities, and in meeting ever-rising demand pressures (particularly on SEND [special needs] budgets, children’s social care, homelessness and adult social care), we fear more people will fall into debt this winter.”

The council leader backs calls made by London Councils, a cross-party organisation representing the capital’s local authorities, for the Government to double the household support fund, provide immediate emergency funding for adult social care, pump money into a domestic retrofitting programme to alleviate fuel poverty, and confirm details of a two-year local government finance settlement.

Although he welcomes the Government’s announcement that additional funding for social care would be “maintained at the same level”, he says the move “does not nearly go far enough”, adding: “we need a more comprehensive package to be able to help our residents, businesses and communities”.

In a separate statement, Cllr Rawlings said: “There are 9,500 Barnet families with debts over £1,000 who need immediate help, and these are just the ones we know about. While we’re doing everything we can locally to support those impacted by the cost-of-living crisis, the government have utterly failed to prioritise those in need.”

The Labour leader said the government had given “tax cuts to the super-rich and bonanza bonuses to bankers, maxing out the national credit card and leaving future generations to pay the bill”. He added: “This is a budget that gambles with people’s livelihoods, and that will deepen inequality. I urge the Government to think again.”

When the mini-budget was unveiled last week, the chancellor said it sent a “clear signal that growth is our priority”, adding: “We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.”

He claimed cuts to income tax next year meant 31 million people would be better off by an average of £170 per year, while “major cuts” to stamp duty would support first-time buyers. The chancellor said the energy price guarantee would “save the typical household £1,000 a year on their energy bill”, and the energy bill relief scheme would halve the cost of business energy bills.

Further measures set out in the mini-budget include cancelling a planned rise in corporation tax and reversing the 1.25 percentage point rise in national insurance contributions.

HM Treasury and the Department for Levelling Up, Housing and Communities were approached for comment.



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