London Daily

Focus on the big picture.
Monday, Dec 29, 2025

I understand anxiety over rising prices, says Chancellor Rishi Sunak

I understand anxiety over rising prices, says Chancellor Rishi Sunak

Chancellor Rishi Sunak has said he "understands people's anxiety... about rising prices" and insisted he will "always be listening" to concerns.

He pointed to a living wage rise and the winter fuel payment as ways the government is helping people.

But the chancellor is coming under pressure from Labour and some of his own MPs to cut the VAT on energy bills.

And minister Jacob Rees-Mogg is reported to have raised concern about a tax rise coming into force in April.

On Wednesday, the Financial Times said the leader of the House, Mr Rees-Mogg, had argued against a hike in National Insurance in a Cabinet meeting, calling instead for savings to be made in government spending.

The government says the rise will initially help tackle the backlog in the NHS, and later be invested in social care.

Asked if there were splits in the Cabinet over the tax, Mr Sunak said he had respect for his colleagues but added that it was "not a responsible thing to do" to "duck difficult decisions" and that people wanted the government to invest in the NHS and social care.

The tax rise is due to kick in during April, around the same time households could see a big rise in their energy bills.

Soaring global gas prices on the wholesale market have put pressure on suppliers, and 27 energy companies have gone bust.

Speaking in the Commons on Thursday, Conservative MP Peter Bone urged the government to cut VAT on energy bills to help consumers.

"Energy costs are not a luxury, they are a necessity, something that you can't avoid. You need to heat your home," he said.

Energy costs


Labour are also urging the government to scrap VAT on energy bills with the party's deputy leader Angela Rayner accusing the prime minister of failing "to invest in long term energy security" and that "yet again working families are picking up tab for his incompetence" at Prime Minister's Questions on Wednesday.

Liberal Democrat leader Sir Ed Davey says the warm homes discount should be increased from £140 per year to £300 and offered to more people.

Speaking to the Today programme, he said: "We've got to pay for it. But one of the other effects of the big rising global gas prices, as well as hitting people with their heating bills, is it's resulted in record profits for the oil and gas sector.

"I think at this stage, when people are going to face an average increase in energy bill of nearly £700, and these oil and gas sectors are making super-profits, it's not unreasonable to ask them to make a contribution."

Speaking from a vaccination centre in West Sussex, the chancellor said the government had put in place a series of measures to help people with energy costs.

"We announced half a billion pounds towards the end of last year to help millions of families - £100-£150 to help them get through the winter," he said.

The chancellor also cited the warm homes discount which reduces energy bills by £140, cold weather payments and winter fuel discounts.

"There is support there for people," he said, but added that he was "always listening making sure the policy we've got will support people in the way we want it to, and that's what our track record over the last year or two shows".

What are the options to tackle the energy crisis?

Abolishing VAT of 5% on energy bills would be quick and easy, but is considered a blunt instrument, as it would provide support to well-off customers who don't need it.

And for those that do need it, 5% of a possible £700 price rise is pretty small.

The government could temporarily suspend the additional levies on bills that fund green policies.

But that would be a tricky sell in some quarters, after the UK hosted a major global climate summit, and these levies are designed to reduce dependence on volatile fossil fuels.

One other option is to extend and expand the Warm Homes Discount. Currently, customers in receipt of certain benefits can apply for a one-off payment of £140.

And another option - suggested by the industry - would be to subsidise the energy companies themselves, by establishing a fund or facility which would allow them to draw down government cash when wholesale prices were very high and then pay it back when prices dipped again.


Rishi Sunak says he wants to “make sure policies we’ve got in place do help people”


Newsletter

Related Articles

0:00
0:00
Close
UK Plans Royal Diplomacy with King Charles and Prince William to Reinvigorate Trade Talks with US
King Charles and Prince William Poised for Separate 2026 US Visits to Reinforce UK-US Trade and Diplomatic Ties
Apple Moves to Appeal UK Ruling Ordering £1.5 Billion in Customer Overcharge Damages
King Charles’s 2025 Christmas Message Tops UK Television Ratings on Christmas Day
The Battle Over the Internet Explodes: The United States Bars European Officials and Ignites a Diplomatic Crisis
Princesses Beatrice and Eugenie Join Royal Family at Sandringham Christmas Service
Fine Wine Investors Find Little Cheer in Third Year of Falls
UK Mortgage Rates Edge Lower as Bank of England Base Rate Cut Filters Through Lending Market
U.S. Supermarket Gives Customers Free Groceries for Christmas After Computer Glitch
Air India ‘Finds’ a Plane That Vanished 13 Years Ago
Caviar and Foie Gras? China Is Becoming a Luxury Food Powerhouse
Hong Kong Climbs to Second Globally in 2025 Tourism Rankings Behind Bangkok
From Sunniest Year on Record to Terror Plots and Sports Triumphs: The UK’s Defining Stories of 2025
Greta Thunberg Released on Bail After Arrest at London Pro-Palestinian Demonstration
Banksy Unveils New Winter Mural in London Amid Festive Season Excitement
UK Households Face Rising Financial Strain as Tax Increases Bite and Growth Loses Momentum
UK Government Approves Universal Studios Theme Park in Bedford Poised to Rival Disneyland Paris
UK Gambling Shares Slide as Traders Respond to Steep Tax Rises and Sector Uncertainty
Starmer and Trump Coordinate on Ukraine Peace Efforts in Latest Diplomatic Call
The Pilot Barricaded Himself in the Cockpit and Refused to Take Off: "We Are Not Leaving Until I Receive My Salary"
UK Fashion Label LK Bennett Pursues Accelerated Sale Amid Financial Struggles
U.S. Government Warns UK Over Free Speech in Pro-Life Campaigner Prosecution
Newly Released Files Shed Light on Jeffrey Epstein’s Extensive Links to the United Kingdom
Prince William and Prince George Volunteer Together at UK Homelessness Charity
UK Police Arrest Protesters Chanting ‘Globalise the Intifada’ as Authorities Recalibrate Free Speech Enforcement
Scambodia: The World Owes Thailand’s Military a Profound Debt of Gratitude
Women in Partial Nudity — and Bill Clinton in a Dress and Heels: The Images Revealed in the “Epstein Files”
US Envoy Witkoff to Convene Security Advisers from Ukraine, UK, France and Germany in Miami as Peace Efforts Intensify
UK Retailers Report Sharp Pre-Christmas Sales Decline and Weak Outlook, CBI Survey Shows
UK Government Rejects Use of Frozen Russian Assets to Fund Aid for Ukraine
UK Financial Conduct Authority Opens Formal Investigation into WH Smith After Accounting Errors
UK Issues Final Ultimatum to Roman Abramovich Over £2.5bn Chelsea Sale Funds for Ukraine
Rare Pink Fog Sweeps Across Parts of the UK as Met Office Warns of Poor Visibility
UK Police Pledge ‘More Assertive’ Enforcement to Tackle Antisemitism at Protests
UK Police Warn They Will Arrest Protesters Chanting ‘Globalise the Intifada’
Trump Files $10 Billion Defamation Lawsuit Against BBC as Broadcaster Pledges Legal Defence
UK Says U.S. Tech Deal Talks Still Active Despite Washington’s Suspension of Prosperity Pact
UK Mortgage Rules to Give Greater Flexibility to Borrowers With Irregular Incomes
UK Treasury Moves to Position Britain as Leading Global Hub for Crypto Firms
U.S. Freezes £31 Billion Tech Prosperity Deal With Britain Amid Trade Dispute
Prince Harry and Meghan’s Potential UK Return Gains New Momentum Amid Security Review and Royal Dialogue
Zelensky Opens High-Stakes Peace Talks in Berlin with Trump Envoy and European Leaders
Historical Reflections on Press Freedom Emerge Amid Debate Over Trump’s Media Policies
UK Boosts Protection for Jewish Communities After Sydney Hanukkah Attack
UK Government Declines to Comment After ICC Prosecutor Alleges Britain Threatened to Defund Court Over Israel Arrest Warrant
Apple Shutters All Retail Stores in the United Kingdom Under New National COVID-19 Lockdown
US–UK Technology Partnership Strains as Key Trade Disagreements Emerge
UK Police Confirm No Further Action Over Allegation That Andrew Asked Bodyguard to Investigate Virginia Giuffre
Giuffre Family Expresses Deep Disappointment as UK Police Decline New Inquiry Into Andrew Mountbatten-Windsor Claims
Transatlantic Trade Ambitions Hit a Snag as UK–US Deal Faces Emerging Challenges
×