There was a worse than expected performance for retail sales last month, defying predictions of a consumer-led pick up from recession for the UK economy.

The Office for National Statistics (ONS) reported sales volumes were flat in March, following an upwardly revised figure of 0.1% for the previous month.

It said sales at non-food stores helped offset declines at supermarkets.

Sales of fuel rose by 3.2%.

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ONS senior statistician Heather Bovill said of the overall picture: “Retail sales registered no growth in March.

“Hardware stores, furniture shops, petrol stations and clothing stores all reported a rise in sales.

“However, these gains were offset by falling food sales and in department stores where retailers say higher prices hit trading.

“Looking at the longer-term picture, across the latest three months retail sales increased after a poor Christmas.”

While the performance will not damage the expected exit from recession during the first quarter of the year, it suggests that consumers are still carefully managing their spending.

While the cost of living crisis – exacerbated by the Bank of England’s interest rate rises to push inflation down – has severely damaged budgets, wage growth has been rising at a faster pace than prices since last summer.

Separate ONS data this week has shown the annual rate of inflation at 3.2% – with wages growing at a rate of 6% when the effects of bonuses are stripped out.

Economists widely believe consumer spending power will win through as the year progresses, despite borrowing costs remaining at elevated levels.

A measure of consumer confidence released on Friday showed confidence had increased for a sixth consecutive quarter to its highest level since the summer of 2021.

Deloitte’s measure showed an increase of 6.5 percentage points on this time last year.

Its survey cited an improvement in personal finances as inflation eased.

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The company’s consumer insight lead Celine Fenech said of its findings: “It is encouraging to see that consumers are feeling more confident in their personal finances – particularly younger consumers.

“Many consumers are paying less for essentials such as utility bills… however, spending on non-essential goods and services dropped this quarter, meaning that improving confidence is not yet translating to a significant boost to spending, and cautious optimism is required.”

She added: “Consumer confidence at its highest level in two-and-a-half years combined with the weather hopefully improving, should signal a brighter outlook for the consumer sector.”

Rishi Sunak is to call for an end to the “sick note culture” in a major speech on welfare reform – as he warns against “over-medicalising the everyday challenges and worries of life”.

The prime minister wants to shift the focus to “what people can do with the right support in place, rather than what they can’t do”.

Mr Sunak also wants sick notes to be issued by “specialist work and health professionals” rather the GPs in order to reduce workloads.

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The plans, which the government is now set to consult on, come as part of the government’s aims to cut spending on benefits in a bid to reduce spending and increase employment.

Mr Sunak is set to say: “We should see it as a sign of progress that people can talk openly about mental health conditions in a way that only a few years ago would’ve been unthinkable, and I will never dismiss or downplay the illnesses people have.

“But just as it would be wrong to dismiss this growing trend, so it would be wrong merely to sit back and accept it because it’s too hard; or too controversial; or for fear of causing offence.

“Doing so, would let down many of the people our welfare system was designed to help.”

He will say there is a “growing body of evidence that good work can actually improve mental and physical health”.

“We need to be more ambitious about helping people back to work and more honest about the risk of over-medicalising the everyday challenges and worries of life,” Mr Sunak will add.

The prime minister will say, “we don’t just need to change the sick note, we need to change the sick note culture so the default becomes what work you can do – not what you can’t”.

“Building on the pilots we’ve already started we’re going to design a new system where people have easy and rapid access to specialised work and health support to help them back to work from the very first Fit Note conversation,” he will add.

“We’re also going to test shifting the responsibility for assessment from GPs and giving it to specialist work and health professionals who have the dedicated time to provide an objective assessment of someone’s ability to work and the tailored support they need to do so.”

It comes after Mel Stride, the work and pensions secretary, was criticised a month ago for suggesting in an interview that there was “a real risk” that “the normal ups and downs of human life” were being labelled as medical conditions which then held people back from working.

And upon launching the government’s “back to work plan”, Chancellor Jeremy Hunt warned that “anyone choosing to coast on the hard work of taxpayers will lose their benefits”.

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Since 2020, the number of people out of work due to long-term sickness has jumped drastically to a record high of 2.8 million people as of February this year, according to the latest estimates from the Office for National Statistics.

A large proportion of those report suffering from depression, bad nerves or anxiety.

The government said NHS data shows almost 11 million fit notes were issued last year – with 94% stating someone was “not fit for work”.

“A large proportion of these are repeat fit notes which are issued without any advice, resulting in a missed opportunity to help people get the appropriate support they may need to remain in work,” Downing Street said.

Fit notes are usually required by employers when someone takes more than seven days off work due to illness.

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Disability equality charity Scope has said it would question whether Mr Sunak’s announcements are being “driven by bringing costs down rather than how we support disabled people”.

James Taylor, director of strategy at the charity, said: “We’ve had decades of disabled people being let down by failing health and work assessments; and a broken welfare system designed to be far more stick than carrot.

“Much of the current record levels of inactivity are because our public services are crumbling, the quality of jobs is poor and the rate of poverty amongst disabled households is growing.”

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Alison McGovern, Labour’s acting shadow work and pensions secretary, said: “A healthy nation is critical to a healthy economy, but the Tories have completely failed on both.

“We’ve had 14 Tory years, five Tory prime ministers, seven Tory chancellors, and the result is a record number of people locked out of work because they are sick – at terrible cost to them, to business and to the taxpayer paying billions more in spiralling benefits bills.

“Today’s announcement proves that this failed government has run out of ideas, announcing the same minor alternation to fit notes that we’ve heard them try before. Meanwhile, Rishi Sunak’s £46bn unfunded tax plan to abolish national insurance risks crashing the economy once again.”

A sub-postmaster victim of faulty IT software Horizon was described as a “bluffer” when he alerted senior Post Office officials about bugs in the system.

One of the Post Office’s heads of legal Rodric Williams dismissed the complainant and told the Post Office Horizon Inquiry on Thursday there was “bunker mentality” among staff in relation to the media’s coverage of the IT system.

The inquiry has been hearing evidence to examine who in government and the Post Office knew what and when about the accounting computer programme that falsely generated financial losses at Post Office branches across the UK and led to the conviction of hundreds of sub-postmasters who ran branches for theft and false accounting.

As a result of Horizon’s errors, many other sub-postmasters lost homes, moved out of their communities, and became unwell having wracked up significant debts and had their reputations ruined.

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But in 2015 – while prosecutions were taking place with Horizon data and four years before the Post Office would apologise for the miscarriage of justice – the warnings of former sub-postmaster Tim McCormack were dismissed.

“Generally, my view is that this guy is a bluffer, who keeps expecting us to march to his tune,” Mr Williams – who is now tasked with dealing with Horizon complaints – said in an email to colleagues.

“I don’t think we should do that, but instead respond with a straight bat.”

The lawyer had been asked by former chief executive Paula Vennells to look into, what Mr McCormack said, was “clear and unquestionable evidence of an intermittent bug in Horizon that can and does cause thousands of pounds in losses to sub-postmasters”.

‘Bunker mentality’

Mr Williams agreed that there was an element of siege mentality at the Post Office against media questioning.

“I don’t know if I can speak for senior management but I do think certainly where I was sitting it did feel a bit bunker mentality, yes,” he told the inquiry.

When asked by barrister for the inquiry, Jason Beer: “It’s that siege mentality again, Mr Williams, isn’t it? Challenges to the Post Office are hostile and must be fended off rather than considered on their merits.”

Mr Williams responded, “I think that’s maybe overstating but there’s probably something in that, I think, that’s fair”.

‘Take it or leave it’

In response to a 2014 media request about Horizon satisfaction levels among sub-postmasters, Mr Williams effectively said they could use the system or leave.

“We don’t need to do research on Horizon – it’s the system we provide to our agents and require them to use. If agents don’t like it, they can choose not to provide services for us,” he said at the time.

“The vast majority of our agents and other users work with it just fine, and we’re not required to bespoke our point of sale accounting system to the whims of each individual agent.”

He was asked if it was his view, in 2014, that sub-postmasters could either use Horizon or leave he replied “yes”.

Mr Williams began at the organisation in 2012 as a litigation lawyer and still works there as the head of the remediation unit set up to address sub-postmaster complaints about Horizon.

His evidence continues on Friday.

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Ms Vennells has said: “I continue to support and focus on co-operating with the inquiry and expect to be giving evidence in the coming months.

“I am truly sorry for the devastation caused to the sub-postmasters and their families, whose lives were torn apart by being wrongly accused and wrongly prosecuted as a result of the Horizon system.

“I now intend to continue to focus on assisting the inquiry and will not make any further public comment until it has concluded.”