The UK is experiencing the highest price rate in the last 40 years. Chancellor Rishi Sunak has already warned that the next few months ‘will be tough’. He also added that he would reduce costs for the businesses encouraging them to invest and that the government is there to help households facing soaring energy, fuel and food costs and is ‘ready to do more’.
The drastic rise in energy bills is hitting hard on the poor. The poor have been affected by this the most, as they have to spend way above their budget on gas and electricity. IFS said that the poorest households spend around 11% of their income on gas and electricity while the richest households only spend approximately 4%.
UK inflation has risen to 9% this April in the last 12 months, being the highest level since 1982. Millions of people are seeing £700-a-year rise in energy costs. Rishi Sunak mentioned that the economic situation was ‘getting serious’ and that the country was facing global supply shocks, including the impact of the war in Ukraine and the lockdown in China. He also added, ‘There is no measure any government could take, no law we could pass, that can make these global forces disappear overnight’. It will not be easy to cut costs for families. He is calling out on businesses to boost investment and training to help grow the economy and ease the cost of living. The economy is actually taking a turn for the worse. Mr Sunak said, ‘Our firm plan is to reduce and reform your taxes to support you’
According to the Office For National Statistics (ONS), higher electricity and gas bills were the cause of a rise in inflation in April. A higher energy price cap refers to the maximum price per unit that suppliers can charge customers that have increased in the last month, on average, homes are paying approximately £1,971 per year for gas and energy. Fuel prices have taken another hit, petrol and diesel prices have reached new records of £1.68 and £1.81 per litre respectively. The ONS also added that while the prices of other goods and services are increasing, wages are failing to keep up with the rising prices and the inflation.
Parents are skipping meals to feed their kids. Disable people cannot afford vital equipment because of the high rise in energy bills. People are trying to keep their costs as low as possible, but their expenditure are still extending their budgets
UK has the highest rate of inflation (9%) among the G7 countries, including Germany (7.4%) and France (4.8%). Rishi Sunak has promised tax breaks for business in the autumn budget.
Measures taken by chancellor Rishi Sunak to help citizens pay their bills are as follows:
Warm Home Discount Quadrupled
The Warm Home Discount Scheme is increasing to £150 from £140 and extended to 780,000 more households in October. It will help pay energy bills and will be available to 2.7million. It is valid for people on low incomes or who get a Guarantee Credit element of Pension Credit.
Bringing forward a 1p income tax cut
Rishi Sunak has already guaranteed to cut down income tax by 1p in the pound from 20% to 19% from 2024. This would save around £175 a year, but those under £12,570 a year gain no benefit from this as the tax threshold is frozen, and the gain could be wiped out by inflation.