London Daily

Focus on the big picture.
Monday, Sep 28, 2026

Rishi Sunak seeks to combat cost-of-living squeeze, without compromising his government income from endless taxes

Rishi Sunak seeks to combat cost-of-living squeeze, without compromising his government income from endless taxes

The chancellor cuts fuel duty and eases National Insurance rise but soaring prices threaten tough times.

Chancellor Rishi Sunak has set out measures aimed at combating soaring energy, food and fuel prices, in his Spring Statement.

He cut fuel duty by 5p but resisted calls to scrap April's National Insurance rise of 1.25p in the pound.

He warned the UK's post-pandemic recovery had been blown off course by the war in Ukraine.

But he held out the promise of an income tax cut in 2024 when he said the economy would be in better shape.

Labour said he had made an "historic mistake" by pushing ahead with next month's National Insurance increase, which the party warned would hit workers hard.

But the chancellor said the money raised was needed for the NHS - and instead he said he would raise the threshold at which workers start paying National Insurance from £9,600 to £12,570.

This would amount to "a £6bn personal tax cut for 30 million people across the United Kingdom, a tax cut for employees worth over £330 a year," said the chancellor.

Mr Sunak warned the economic outlook was uncertain and the full impact of the war in Ukraine was not yet clear.

The Office for Budget Responsibility painted a bleak picture of the UK's immediate economic prospects, saying that living standards are set to take the biggest hit since records began in the 1950s.

It said inflation was set to peak at 8.7% at the end of this year and this - combined with rising taxes - will "weigh heavily on living standards in the coming 12 months".

The watchdog said the UK's tax burden will be at the highest level since the 1940s.

Other measures in the chancellor's mini-Budget include:

*  VAT on solar panels, heat pumps, roof insulation and other energy saving measures will be reduced from 5% to zero for five years

*  The employment allowance will increase from £4,000 to £5,000, allowing small businesses to reduce their National Insurance payments

*  Green technology will be exempt from business rates from April, saving firms £35m in 2022-23

*  Councils get another £500m for the Household Support Fund from April, designed to help vulnerable households with rising living costs

Labour's shadow chancellor Rachel Reeves said Mr Sunak had failed to appreciate the scale of the cost of living crisis facing workers and pensioners.

She told MPs: "In eight days, people's energy bills will be rising by 54%, two weeks today the chancellor's tax hike will start hitting working people and their employers.

"His National Insurance tax rise was a bad idea last September and he's admitted it's an even worse one today."

She repeated Labour's call for a windfall tax on energy companies.


What's deeply unusual is that Mr Sunak chose to announce this giveaway, a penny off income tax, two years before it would kick in.

It's certainly unusual to announce election goodies this far out, not just because it kills any element of political surprise, but also it ties the Chancellor's hands in the years ahead.

While the moves seem to designed to polish up Mr Sunak's credentials as a tax cutter, the black and white of the statement documents beg to differ.

As chancellor, he has increased taxes massively more than he has just reduced them.

The SNP criticised Mr Sunak over his decision not to reverse the removal of the £20-a-week top-up to Universal Credit payments, or to increase other benefits, "at a time when people need it the most".

Paul Johnson, director of the Institute for Fiscal Studies think tank, said "the very poorest" could see their cost of living increase by 10%, despite a "small amount of extra cash" promised by the chancellor for local authorities to help those on benefits.

Sir Ed Davey, the Liberal Democrat leader, said the Spring Statement was a "total swindle" by Mr Sunak, who he said was "giving with one hand and taking with another".

And the Green Party criticised him for not mentioning climate issues. Its co-leader Adrian Ramsay accused Mr Sunak of "[looking] after the interests of fossil fuel companies".


Mr Sunak promised the government would "stand by" families struggling with the cost of living.

And in a surprise announcement at the end of his statement, he said his ambition was to cut the basic rate of income tax by 1p in the pound.

"It would clearly be irresponsible to meet this ambition this year," he told MPs, but official forecasts said inflation would be "back under control" and national debt falling by 2024, making a cut possible then, he added.

"I can confirm, before the end of this Parliament, in 2024, for the first time in 16 years, the basic rate of income tax will be cut from 20p to 19p in the pound.

"A tax cut for workers, for pensioners, for savers. A £5bn tax cut for 30 million people. It is fully costed and fully paid for in the plan announced today."


Watch: Chancellor Rishi Sunak announces that income tax will be cut by 2024

WATCH: Labour's Rachel Reeves responds to Rishi Sunak's Spring Statement


Newsletter

Related Articles

0:00
0:00
Close
RNLI Chief Executive Condemns Misinformation and Abuse Targeting Volunteer Crews
Metropolitan Police Charge Swindon Man with Assisting Foreign Intelligence Services
British Intelligence Report Warns Environmental Collapse Threatens Global Defense Infrastructure
Conservative Party Rejects New Taxes to Fund UK Social Care Reforms
Labour Government Signals Intent to Ease Residency Restrictions for Foreign Care Workers
Prime Minister Andy Burnham and Norwegian Prime Minister Jonas Støre Meet to Strengthen North Atlantic Defense
UK Government Plans to Revive Equity Loan Scheme to Assist First-Time Home Buyers
Prime Minister Andy Burnham Pledges Radical Reform for UK Utilities and Social Care
UK Treasury Prepares Difficult Autumn Budget Amid High Debt and Energy Volatility
Civil Aviation Authority Launches Review of Air Traffic Systems Following Digital Failure
X Reports First Increase in UK Revenues Following Advertiser Boycott
Shetland Islands Council Approves £400 Million Inter-Island Tunnel Project
Foreign Secretary Ed Miliband Warns Iran Against Hostile Activities on British Soil
UK Ministers Concede Chagos Islands Sovereignty Agreement Terminated After US Opposition
More in Common Poll Projects Hung Parliament with Labour Leading and Reform UK Gains
Prime Minister Andy Burnham Defends Economic Strategy as Public Finances Face Headwinds
Tony Blair Urges Government to Set Long-Term Goal of Rejoining the European Union
Prime Minister Andy Burnham Pledges Universal Free Social Care Funded Through General Taxation
UK Diesel and Petrol Prices Surge Near All-Time Highs Amid Middle East Energy Volatility
Analysis of Reform UK conference highlights deep political divisions over welfare and immigration
Bangladesh garment exports to the United Kingdom reach $915 million in early fiscal year
Royal Navy begins sea trials for new HMS Agamemnon hunter-killer submarine
New report suggests UK data centre expansion will create far fewer jobs than predicted
Major weekend closures announced for London Underground Piccadilly and Central lines
NHS leaders call for emergency winter funding to combat staffing shortages and rising illness
Far-right activist Daniel Thomas charged following alleged slashing of migrant dinghy
Home Secretary orders urgent review of border security following rise in small boat crossings
Prime Minister Andy Burnham to address Labour Party conference amid calls for long-term infrastructure plan
UK Treasury and Bank of England warn of rising inflation risks amid Middle East tensions
Royal Navy Diving Squadron Honoured for Global Bomb Disposal Efforts
UK State Pension Set to Approach £13,000 Per Year Under Triple-Lock
Rolls-Royce Wins Multi-Million-Pound Engine Contract with Philippine Airlines
TfL Questions Future of Heathrow Express Amid Proposed £33 Billion Expansion
Ed Miliband Warns Iran Against Hostile Operations on British Soil
S&P Global Manufacturing Index Signals Stabilization Amid Rising Fuel Costs
Prime Minister Andy Burnham Launches National Centre for Information Defence
UK Food and Drink Trade Deficit Surges to £21.1 Billion
OECD Upgrades United Kingdom Economic Growth Forecast to 1.1 Percent
Bank of England Faces Policy Challenges as Energy Prices Push Inflation Projections Higher
IMF Urges UK and Major Economies to Reduce Public Borrowing and Debt
UK Government Concedes Chagos Islands Sovereignty Deal is Dead Following Trump Opposition
Prosecutors Seek More Than 10 Years in Prison for Former DUP Leader Jeffrey Donaldson
UK Provided £66 Million in Emergency Security Funding for Mosques After Southport Disorder
Manston Inquiry Examines Role of Government Decisions in 2022 Overcrowding Crisis
Justice System Capacity Pressures Raise Concerns Over Release of Sex Offenders
UK Food and Drink Trade Deficit Widens to Record £21.1 Billion
UK Releases Climate Security Findings Previously Withheld Under Starmer
TalkTalk Races to Sell Consumer and Broadband Businesses as Administration Threat Looms
NHS Bodies Impose Minimum Two-Year Waits for ADHD and Autism Assessments
Andy Burnham Pledges £210 Million to Revive Boarded-Up High Streets
×