This is a summary of the impact of the government’s autumn budget on Black and Minoritised people. This summary will cover changes to taxes, public spending, health and social care, wages, pensions, and benefits.
Overview
Throughout the fiscal year of 2021-22, indicators of economic growth have been moving towards constriction. With the announcement of Chancellor Jeremy Hunt’s Autumn Budget (2022), the United Kingdom has officially entered into a period of recession. Due in part to various factors, which include but are not limited to: the COVID-19 Pandemic, the Russo-Ukrainian War and subsequent increases in gas and electricity, and former Prime Minister Liz Truss’s min-budget, Chancellor Jeremy Hunt released his budget in an attempt to weather the economic “storm”.
Having seen a meteoric rise in the cost of living – approximately the fastest increase in 41 years – the Conservative Government intends to restore the economic position of the United Kingdom. The Office for Budget Responsibility (2022) predict that half a million people will lose their jobs, with inflation eroding real wages over the fiscal years of 2023-24. This ‘Cost-of-Living’ Crisis, having impacted all individuals in the United Kingdom, is set to disproportionately impact Black and Minoritised workers throughout the country. 41% of the surveyed Black and Minoritised workers express worry over potential redundancy, compared to just 27% of white British workers (People Like Us, 2022). Moreover, 52% of Black and Minoritised workers state that the provided Government support would not be enough to support them in the next six months – compared to the 45% of white British workers surveyed (People Like Us, 2022).
Cognizant of such concerns, Chancellor Jeremy Hunt states that the autumn budget will work to protect the well-being of the nation’s most vulnerable.
The National Cost of Living
The National Cost of Living has seen a stark increase, with the Consumer Prices Index rising by 8.6% in the last twelve months to August 2022 (ONS 2022). The Runnymede Trust reports further that Black and Minoritised people are 2.5 times more likely to be in relative poverty. Moreover, 26% of Black and Minoritised people in the United Kingdom live in what is considered “deep poverty”. Calls for increases in wages and government support in line with inflation–no doubt in an effort to combat the rising cost of living–played a central role in the formation of the autumn budget. Issues surrounding wages are of pressing concern, particularly to Black and Minoritised professionals. The autumn budget will implement the following changes:
The National Living Wage will experience a 9.7% increase, from £9.50 to £10.42 per hour. However, an increase in the general National Living Wage does not address the systemic issues that perpetuate the ‘Ethnicity Pay Gap’. Indeed, People Like Us (2022) research has revealed that Black and Minoritised professionals are paid 84% of what their white British counterparts earn. Changes made to pensions, wages, and benefits in the autumn budget will not remedy the existing ethnicity pay gap unless systemic reforms are made. This increase is also not in line with the Actual Living Wage of £10.90 in the UK and £11.95 in London specifically. This will inevitably impact those of Bangladeshi, Pakistani and Black individuals who make over 10% of workers at the minimum wage. Unfortunately, the proposed increase in wages may not be enough to cover the rising cost of essential living (Gov.uk, 2021).
The autumn budget will also provide a £900 cost of living payment to the “most vulnerable”. Pensioners will receive an extra £300, while those on disability benefits will receive an extra £150. People considered eligible are those who claim Universal Credit, Income-based Jobseeker’s Allowance, Income-related Employment, and Support Allowance, Income Support, Pension Credit, Working Tax Credit, and Child Tax Credit. It must be noted that concepts such as “vulnerability” and “deservingness” operate within the context of discourse that place blame upon individual factors that contribute to poverty (Dupont, Anderson, and Vicol, 2019). The Commission on Race and Ethnic Disparities Report (March 2021) denies the impact of systemic racism within the United Kingdom, pointing towards the discrete, individual instances of racial discrimination as the greatest perpetrator of race-based discrimination. This is in spite of individuals migrating from the Caribbean being deprived of both the right to live in the United Kingdom and their ability to receive welfare benefits (Njoroge, 2021). Particularly, Black and Minoritised individuals who experience ‘informal colour’ barriers (Shilliam, 2018) to employment may be at risk of losing benefits – and thus eligibility for the cost of living payment – due to being perceived as ‘lazy’. Certainly, 1.1 per cent of non-white persons in the South West claim Job Seekers Allowance in comparison to 0.7% of White people in the South West.
In general, Universal Credit and the benefits cap will experience a rise with inflation (10.1%). However, more than 600,00 people on Universal Credit will be expected to meet with their work coaches at the risk of sanctions if a meeting fails to materialise. This will particularly impact Black and Minoritised individuals who hold care responsibilities to various family members, with 24% of Bangladeshi households, 18% of Pakistani households, and 16% of Black African households experience overcrowded families due to larger families compared to only 2% of White households experiencing overcrowding (Gov.uk, 2021). Potential remedies for childcare and elderly care whilst meeting work coaches are distinctly inaccessible to Black and Minoritised families due to cost, distance, and discrimination (Waddell et al, June 2022).
Foreign Aid and Climate Change
Considering the energy crisis experienced by the United Kingdom, the autumn budget has placed emphasis on the improvement of energy efficiency from 2025, promising an extra £6 billion. Furthermore, the Chancellor has stated that the Government will remain “fully committed” to the Cop26 conference, which will include their promised 68% reduction in United Kingdom CO2 emissions by 2030. This change, welcomed by environmentalists, is also paired with an increase of 10% to the windfall tax on oil and gas corporations (from 35% to 45%). However, the Energy Profits Levy has been criticised for including tax relief on investment in oil and gas extraction – an action that aids in fueling the increase in the global climate (Smith, 2022). But some take umbrage with the inclusion of low-carbon electricity generators to the 45% windfall tax, with no equivalent investment incentive available to the renewable energy sector. This may mean that wind wars will pay higher windfall taxes than oil and gas stations in the same jurisdictions. With no further discouragement on the continued reliance on fossil fuels, Black and Minoritised people – particularly in industrial areas such as London – are 50% more likely to face the highest climate risks than White Britons (London Assembly, 2022). On a larger scale, continued contribution to rising global climate is already impacting those of the Global South, with 33 million people having been displaced in Pakistan due to climate-intense floods (Saadat, 2022).
The Chancellor has announced that electric vehicles will no longer be exempt from the Vehicle Excise Duty from 2025. Electric vehicles bought between the years of 2017 and 2025 will be set to pay the annual standard rate of £165 per year. Ordinarily, the choice to move on to electric vehicles by employees/employers of Black and Minoritised-owned local businesses in Bristol may be motivated by the introduction of the Clean Air Emission Zone on the 28th of November 2022, which will see a £9 daily charge for fossil-fuelled vehicles. However, the introduction of the Vehicle Excise Duty on electric vehicles effectively reverses the measures taken by individuals. Moreover, the Institute of Economic Affairs has found that a majority of minicab taxi drivers are Black and Minoritised individuals. Considering that 90% of new vehicles joining the Uber scheme are electric vehicles, a large share of taxi drivers will begin to see charges to their vehicles when utilised for non-work purposes (Evening Standard, 2022).
The autumn budget has also outlined the position of the Government on the foreign aid budget, which will remain at 0.5% until the economy has experienced a return to pre-pandemic states. However, it should be noted that a 0.2% decrease in foreign aid funding will contribute to the ongoing disproportionate climate change impacts already experienced by foreign nations in the Global South.
Public Spending and Healthcare
Amongst the other measures set out in the autumn budget, the Chancellor also announced:
An extra £2.3 billion in funding per year to school budgets.
Investment into social care, providing £1 billion more to increase social care capacity in the next year, with an extra £1.7 billion the year after.
An extra £3.3 billion in investment targeted towards the National Health Service. However, with no reference to the COVID-19 crisis, which has not yet disappeared from public life. Black and Minoritised groups will experience more “long term and severe” health impacts (Public Health England, 2020) than already experienced at the peak of the pandemic.
Delays to the £86,000 cap on how much can be spent on social care. Set to be implemented on October 2023, the Chancellor has delayed the introduction of the cap for an extra two years. This will mean that Britons will pay more for social care for longer than expected.
Conclusion
The changes proposed by the Chancellor in the autumn budget seeks to boost the economy through widespread tax increases and spending cuts. However, with little consideration on its impact on the Black and Minoritised, the issue of systemic racism which makes it more difficult to sustain living is not addressed nor solved by the autumn budget’s proposed policies. Moreover, without any particular dedication to renewable sources of energy, ongoing greenhouse gas emissions may continue to disproportionately impact inner-city Black and Minoritised communities as well as the Black and Minoritised of the Global South. The autumn budget is a clear move towards ‘saving the economy’ through ‘stable’ means, but without clear dedication towards alleviating the issues experienced by the working poor, the Black and Minoritised, and those impacted by climate change, no “real and lasting change” will occur.
Recommendations
An increase of the National Living Wage to not just match inflation, but to also match the Actual Living Wage.
Commitment to renewable energy and acknowledgement of the damage done by the fossil fuel industry. This should entail an increase in windfall tax on gas and oil companies and the abandonment of investment incentives. Conversely, the windfall tax should be disapplied to low-emission electricity generators along with the introduction of investment incentives to the renewable energy sector. This, in theory, should introduce more jobs to the United Kingdom’s labour market.
Scrapping the delay to the £86,000 cap on social care, as well as a more generous cap for those who cannot otherwise afford social care for disabled people and older people.
Extra investment into the National Health Service, along with a substantial increase in the wages of healthcare professionals along – and perhaps beyond – the rate of inflation.
The maintenance of COVID-19 measures in the form of long-term mechanisms.
Increased funding for school budgets, the increase of pay for teachers, and greater subsidisation for education costs – such as transport and school uniforms.
Maintain electric vehicle exemption from the Vehicle Excise Duty.
Commitment to the recognition of systemic racial injustice in the United Kingdom. This should include a review on the politics of “deservingness” which, inevitably, will entail reflections and revisions on who is considered to be “most vulnerable” in the eyes of the government.
Written by, Japheth Monzon, Project Officer and edited by Angelique Retief, Senior Policy Officer.