UK people are facing a cost of living crisis in 2022, Labour has revealed.
In a thread posted this weekend, Labour MP John McDonnell estimated some of the major cost rises facing British households this year amounting to £1405.
McDonnell estimated energy bills will rise by £600, national insurance by £250, food bills by £169, housing costs by £169, income tax threshold by £150 and council tax by £67.
The former shadow chancellor of the Exchequer said someone on a UK median salary would need a five per cent pay rise this year to meet rising living costs.
It comes as the Institute for Fiscal Studies estimated that a person earning £30,000 will see their take-home pay decline by £1,660 because of rising living costs, stagnating salaries and tax increases. By comparison, someone earning £15,000 a year will lose £860 from their real income after tax.
The financial losses faced by UK households amount to the biggest decrease in disposable incomes since the 1970s, according to The Independent.
Solutions proposed by Labour
One of the solutions proposed by McDonnell is “ensuring unions are able to fight for fair pay by repealing anti-union laws”.
He also suggested the government should put forward a “comprehensive rescue package” worth £12.85 billion to provide people with the security “they need”.
This would include a minimum of a five per cent public sector pay rise, worth £3.3 billion.
“How to pay for it? Cancel the £12.5 billion of corporate tax reliefs scheduled for 2022-23, announced in the March 2021 Budget,” McDonnell added.
Meanwhile, Labour leader Keir Starmer hit out at the Tory rule by tweeting that “hard-working people are paying the price” and that Labour would tackle “the Conservatives’ cost of living crisis” and bring down energy bills.
And Labour’s current shadow chancellor of the Exchequer Rachel Reeves said Labour would pay for its proposed plan with a windfall tax on North Sea Oil and Gas profits.
“A decade of Tory incompetence created this crisis,” Reeves said, adding: “Labour will change our energy market for the better”.
Voters feel price rises as Labour accuse Tories of broken Brexit promise
Meanwhile, voters overwhelmingly admitted an increase in living costs, amounting to 86 per cent. In addition, 83 per cent felt an increase in grocery bills, whilst 80 per cent noticed a rise in energy bills and 59 per cent saw an increase in council tax.
The trend of living costs rising more than household income is thought to continue until 2023, with 42 per cent believing the economy will worsen over the next 12 months.
Labour accused Boris Johnson of breaking a Brexit promise made during the 2016 EU referendum campaign on slashing VAT from household energy bills.
The prime minister rejected calls for VAT to be removed, arguing it is not the best way to help those who struggle with rising energy costs, and labelling its removal as “a blunt instrument”.
At the same time, he claimed he is not ruling out other measures – but did not say what those might be.