Chancellor Rishi Sunak has come under more pressure to act on the cost of living crisis after new figures showed a sharp rise in inflation.
The rate of Consumer Price Index inflation increased to 6.2% in February from 5.5% in January, the Office for National Statistics said, with prices increasing on a range of products, including food, toys and games, and clothing.
That rise - which is expected to increase in the coming months - will add more pressure to Mr Sunak as he unveils his Spring Statement. The Chancellor is expected to say he will “stand by” British families amid the deepening cost of living crisis.
It has been suggested Mr Sunak may look to ease the burden on the taxpayer by cutting fuel duty and raising the income threshold at which people begin to pay national insurance. It is also anticipated he will tell MPs in the Commons that having a strong economy is vital in tackling Moscow’s aggression.
Read more : Chancellor urged to reverse National Insurance rise
He is expected to say: “So when I talk about security, yes – I mean responding to the war in Ukraine. But I also mean the security of a faster-growing economy, the security of more resilient public finances, and security for working families as we help with the cost of living.”
Those struggling to pay their energy bills will be hoping for new support from the Chancellor, as charity Citizens Advice said it was “continuing to break unwelcome records… issuing more food bank vouchers and referrals to charitable support than at any point since the start of the pandemic”.
Dame Clare Moriarty, the organisation’s chief executive, said: “In his spring statement, the Chancellor has a crucial opportunity to stem the tide of this cost of living crisis. Increasing benefits in line with inflation, expanding the Warm Home Discount and announcing a more generous energy rebate should be top of his list.”
MPs were told on Tuesday that the measures which had already been announced were “insufficient for the scale of the crisis we’re facing”. Gillian Cooper, head of energy policy at Citizens Advice, told the Commons Business, Energy and Industrial Strategy (BEIS) Committee: “We have to recognise that there are millions of households that are simply unable to cope with the energy bill increases that we’re going to see this year.”
MoneySavingExpert founder Martin Lewis also claimed energy companies were upping customers’ direct debits disproportionately to the price cap increase, even for those in credit. The rocketing energy bills faced by households have been caused in part by a post-pandemic rise in demand for gas, with lower levels of production. This was only exacerbated by the war in Ukraine.
A planned hike in national insurance contributions, combined with forecasts that wages will rise slower than inflation, will also take a toll. A briefing from the House of Commons library said the cost of living across the UK has been rising since early 2021, while in January this year inflation reached its highest recorded level since 1992.
The Chancellor has already announced a £200 loan to gas and electricity payments from October – although not until the price cap jumps 54%. In addition, certain households will get a £150 council tax rebate in April. The Treasury has said the measures announced so far add up to around £21bn of support this year, taking in the rebate, changes to Universal Credit and the freezing of fuel and alcohol duties.
Mr Sunak is also expected to set out how the Government plans to create a new culture of enterprise, helping the private sector to train, invest, and innovate more. But Labour has unveiled analysis claiming Mr Sunak was on track to have raised more tax than any chancellor in 50 years.
The Office for Budget Responsibility (OBR) previously said that by the end of this Parliament the tax burden as a proportion of GDP would be at its highest level in 70 years, as Labour said no other G7 economy was putting up tax on working people this year.
