More than 6.5 million people in working families had no savings when the Covid pandemic began, analysis from Labour has shown, as the party warned a looming tax rise would hit those already hard up and mark a “miserable” start to 2022.
According to the latest figures released by the government, many people had little or no money to fall back on just before the coronavirus struck.
View image in fullscreen‘This is a crisis made in Downing Street’: Jon Ashworth, the shadow work and pensions secretary. Photograph: Anthony Harvey/Rex/ Shutterstock
There were 6,644,281 people in families where at least one adult was working who had no savings, the Labour analysis found, rising to 22,455,726 for those who had less than £1,500. The number of those whose savings only reached £3,000 was 26,680,605.
However, there were 8,728,847 people who said their savings outstripped £20,000.
The figures for those who declared no savings in 2019-20 were difficult to compare with the previous year, because the government had changed the definition of “no savings” in the latest set of data. The Department for Work and Pensions said it now counted those who declared “no savings” and those with less than £1,500 in the same category.
With the energy price cap set to be raised next April and the rise in national insurance rise due to come into effect in April, the shadow work and pensions secretary, Jon Ashworth, claimed working families struggling to stay afloat faced a cost of living crisis – even before inflation.
Seeking to blame people’s hardship on the government’s record, he said: “Eleven years of the Tories has seen family finances hammered and now it’s shaping up to be a miserable January with heating bills rocketing, prices going up and punishing tax rises on the way. This is a crisis made in Downing Street.
“The simple truth is people are skint with little if any savings to fall back on. Ordinary working families shouldn’t be forced to pay the price for Boris Johnson’s economic failure.
“Unlike the Conservatives, Labour wouldn’t be hitting working people with a tax hike, and as heating bills rise, we’d help ease the burden on households by cutting VAT on domestic energy bills now for the winter months”
Ashworth said the problem would be exacerbated by a freeze in the income tax personal allowance, the universal credit uplift having ended and a rise in council taxes.
Energy bills could rise by 50% amid ‘national crisis’ of soaring UK pricesRead more
A government spokesperson said: “We recognise people are facing pressures, which is why we’re taking £4.2bn of decisive action to help.
“We are providing extensive support to those on the lowest incomes – including putting an average of £1,000 more per year into the pockets of working families on universal credit, increasing the minimum wage and helping with the cost of fuel bills.
“Our £500m household support fund is also giving more help to the most vulnerable, and councils have been given an extra £65m to support low income households with rent arrears.”
