KEY POINTS:
- Fuel duty cut by 5p per litre from 6pm on Wednesday
- National Insurance threshold increased by £3,000 from July
- Employment Allowance increased from £4,000 to £5,000 from April
- Scrap VAT on energy efficiency materials installed for five years
- Cut the basic rate of income tax from 20 pence in the pound to 19 before 2024
Rishi Sunak has unveiled a package intended to ease the mounting cost of living crisis as “sky-high” inflation threatens to cripple the economy.
In an important statement, Mr Sunak announced a string of measures, including a cut to fuel duty, a change to National Insurance rules and an abolishment of VAT on energy efficient materials.
In his opening in the House of Commons, the Chancellor explained how the sanctions the Government had taken on Russia would have a knock on effect on the UK economy.
Mr Sunak said: "The actions we have taken to sanction Putin’s regime are not cost free at home, the invasion of Ukraine presents a risk to our recovery as it does to countries around the world.
"We came into this crisis with our economy growing faster than expected, with the UK having the highest growth rate in the G7 last year.
"But the OBR has said specifically, there is an unusually high uncertainty around the outlook, it is too early to know the full impact of the Ukraine war on the UK economy."
He swiftly added: "People should know that we will stand by them as we have done in the last two years.
"Today, I’m announcing immediate measures, firstly I’m going to help motorists.
"Today I’m going to announce for the second time in 20 years, fuel duty will be cut by 5p per litre.
"(This is) the biggest cut to all fuel duty rates ever, and while some have called for the cut to be in place until August, I have decided it will be in place until March next year."
The fuel duty cut will take effect from 6pm on Wednesday, Mr Sunak added.
The Chancellor went on to say: "Secondly, we know that energy efficiency will make a big difference to bills, but if homeowners want to install energy saving materials, at the moment, only some items qualify for a five percent VAT relief.
"The relief used to be more generous but from 2019, the European Court of Justice required us to restrict its eligibility.
Rishi Sunak
GB News
"But thanks to Brexit we are no longer constrained by EU law. So I can announce that for the next five years, homeowners having materials such as solar panels, heat pumps or insulation installed will no longer pay 5 percent VAT, they will pay zero."
Furthermore, the Mr Sunak has pledged doubling the Household Support Fund to £1billion, while also increasing the threshold for paying National Insurance by £3,000 from July.
He said: "From this July, people will be able to earn £12,570 a year without paying a single penny of income tax or National Insurance."
"That’s a £6billion personal tax cut for 30 million people across the United Kingdom."
He also announced an increase in the Employment Allowance from £4,000 to £5,000 from April, while pledging to cut the basic rate of income tax from 20 pence in the pound to 19 before 2024.
The statement came as experts warn that inflation will keep rising if the Government do nothing to overturn it.
Official figures from the Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation rose to 6.2 percent in February, up from 5.5 percent in January.
These figures mark a 30-year-high, when the inflation rate stood at 7.1 percent back in March 1992.
Rachel Reeves hit out at Rishi Sunak
GB News
Grant Fitzner, chief economist at the ONS, said: “Inflation rose steeply in February as prices increased for a wide range of goods and services, for products as diverse as food to toys and games.
“Clothing and footwear saw a return to traditional February price rises after last year’s falls when many shops were closed.
“Furniture and flooring also contributed to the rise in inflation as prices started to recover following new year sales.”
Speaking before the statement, Shadow chancellor Rachel Reeves backed Labour to “get our economy firing on all cylinders.
“With our plans to buy, make and sell more in Britain and our climate investment pledge, we will create a stronger economy,” she added.
Ms Reeves posted a picture on social media showing her preparing for her appearance in the Commons with Labour leader Sir Keir Starmer and shadow Treasury chief secretary Pat McFadden.
But Ms Reeves hit out at Mr Sunak after the statement, adding that "he didn't even know the numbers."
Meanwhile, people across the country are hoping that his fresh statement will help ease the struggling economy.
GB News viewer, Sue Ashcombe-Hurt, who is currently only eating one hot meal a day, has urged the Chancellor to do more to help her.
“I want Rishi to be an actual Tory and not a Labour Chancellor because that’s what he’s been doing and I think they ought to do more about the fraud that’s been going on.
“I spend my money very carefully and I’d spend it a lot better than he does if he keep more of it.
“I switch the heating on perhaps once a week to keep the house warm for three hours and that heats my water up as well.
“I spend most of the time I spend most of my time with two cardigans on usually and I’ve got my fleece to watch the TV.
“I only have one hot meal a day, the rest of the time I drink warm drinks and eat sandwiches basically."