London Daily

Focus on the big picture.
Saturday, Sep 12, 2026

Rishi Sunak: What will the new PM mean for my money?

Rishi Sunak: What will the new PM mean for my money?

Much has changed in the last few months beyond the revolving door of 10 Downing Street.

Inside ordinary homes across the UK, more attention may have been directed at the rising cost of groceries. Over the past year, vegetable oil went up in price by 65%, pasta by 60% and chips by 39%.

Almost half of adults who pay energy bills and 30% paying rent or mortgages say they are struggling to afford these bills, according to the Office for National Statistics.

Of course, our personal finances cannot be disentangled from what is happening in Westminster.

And the arrival of a new prime minister - Rishi Sunak - will have an impact on our money.


Prices are still climbing


Mr Sunak immediately made reference to the "profound economic crisis" faced by the UK. That belief is centred on the soaring cost of living, and a gap in the UK's public finances.

Prices are rising at their highest rate for 40 years - driven primarily by energy and food. Those two necessities are pushing up that inflation rate, which forecasters say is yet to peak.


Remember, even when the inflation rate starts to come down, it is not that prices are actually falling but that the rate of price rises is slowing.

So, people who receive benefits, such as universal credit or the state pension, will want to know whether their payments will go up in line with inflation in April.

Mr Sunak, in his previous role of chancellor, promised that benefits would match prices rises but - according to Sarah Coles, analyst at Hargreaves Lansdown - "there are no guarantees at this stage".

In his opening speech in Downing Street, Mr Sunak gave little away, saying there are "difficult decisions to come" but that they will be tackled with "compassion".

He also said he would deliver on the 2019 Conservative manifesto, which explicitly says the pensions triple-lock would remain in place. That would see the state pension rise in line with inflation in April.

The state pension for people retiring now is currently worth £185.15 a week. If it goes up in line with prices, it will be £203.85 a week from April. If it rises in line with earnings, it will be £195.35 a week.

The basic state pension, for those who reached state pension age before April 2016, is currently £141.85 a week. This would go up to £156.20 if it rises in line with prices, and £149.65 if it rises in line with average earnings. This is topped up with Pension Credit for some low-income pensioners.

"Pensioners need clarity from the new prime minister over what the state pension is likely to rise by next year, so they have the certainty to plan ahead of a difficult winter," says Tom Selby, head of retirement policy at investment firm AJ Bell.

Families will also watch closely to see what the new administration decides to do regarding the long-standing issue of social care, and the impact that has on people's finances later in life.


Support with energy bills


The impact of some of the policies implemented by Mr Sunak as chancellor some time ago are being seen now on household energy bills.

The universal discount of £400 is cutting this winter's domestic bills, and more cost-of-living payments will be made to those on low-incomes receiving benefits in November, and to nearly all pensioners in the next couple of months.


A government policy introduced by Liz Truss which caps the cost of each unit of gas and electricity, and means the typical household's annual domestic energy bill will be £2,500, will be in place this winter.

A decision is needed, if not immediately, on what happens after that.

As it stands, energy bills are likely to rise sharply from April. When chancellor, and during the summer's leadership contest, Mr Sunak focussed on the idea of financial support with bills for the most vulnerable. Those on middle-incomes, worried about the cost of gas and electricity, will hope that support is relatively broad.


Mortgage costs bite


Mortgages have been getting more expensive throughout the year, as the Bank of England increased the benchmark interest rate. After the mini-budget, there was a further surge, with borrowers now paying about 6.5% on a new, typical two- or five-year fixed-rate home loan.

Mr Sunak's arrival at 10 Downing Street comes as the cost of government borrowing has eased, and therefore the cost to lenders to finance mortgage deals has also fallen.

Of course, we will never know how high mortgage rates would have risen without the mini-budget. The expectation in the industry now is that the picture is likely to improve for mortgage borrowers from the current situation, but slowly.

"Rate decreases by lenders are always a gradual thing," says Chris Sykes, of mortgage broker Private Finance.

That will feed through to landlords too, and what they charge their tenants.

Renters may finally get some certainty too on whether no-fault evictions will be banned - another manifesto commitment which at times has looked under threat.


Taxing decisions to be made


When challenging for the leadership against Ms Truss, Mr Sunak pledged to cut the basic rate of income tax from the current 20% down to 19% in April 2024, and then to 16% by the end of the next Parliament.

That ambition seems a very long way off now.

More relevant than tax cuts now is whether there will be any tax rises to repair the public finances. Remember, that manifesto of 2019 ruled out any increase to National Insurance, income tax and VAT.

One rumour that has been swirling is that the threshold at which people pay different rates of income tax may be frozen for longer. That means, even if workers receive a below-inflation pay rise, they could still be drawn into paying income tax at a higher rate.

That remains speculation, among a host of questions that the new prime minister and his chancellor will soon have to answer.

Newsletter

Related Articles

0:00
0:00
Close
UK Reviews Nationwide Emergency Alert Tests After Systems Meet Reliability Targets
UK Seeks Faster Rail Links Across Northern Industrial Corridors
British Business Bank Allocates £150 Million for High-Growth Companies in Northern England
BBC Warns Staff Strikes Are Possible Amid Pay Dispute and £500 Million Savings Drive
UK Backs Short Extension of UN Sudan Sanctions Regime
Prime Minister Andy Burnham Defends Early Prison Release Reforms and Growth Strategy
Reform UK Faces Scrutiny Over Alleged Effort to Circumvent Foreign Donation Rules
UK Analysts Warn Tax Rises or Spending Cuts May Be Needed to Preserve Fiscal Headroom
Jaguar Land Rover Plans Up to 4,000 Job Cuts in £1.7 Billion Cost-Saving Drive
UK Chancellor Warns of Difficult October Budget as Borrowing Costs Rise
UK Declares Israeli Occupation of West Bank Unlawful and Expands Sanctions
UK House of Commons Rejects Assisted Dying Bill for England and Wales
English Councils to Gain Power to Introduce Tourist Taxes by 2028
Kemi Badenoch Reshuffles Conservative Shadow Cabinet
Firefighters Make Progress Containing Major Wildfires in South Wales
John Lewis Partnership Reports £124 Million Loss
Study Says UK AI Data Centres Will Create Only a Quarter of Forecast Jobs
UK Government Considers Higher Industrial Water Prices Amid Supply Pressures
Andy Burnham Holds First Call With Donald Trump as UK Prime Minister
NHS Records Busiest Summer on Record as Heatwaves Drive Hospital Admissions
Home Secretary Orders Police Crackdown on Far-Right Anti-Migrant Vigilantes
UK Supreme Court Rules Northern Ireland Religious Education Curriculum Breaches Human Rights Standards
Markets Price in Four Bank of England Rate Rises by Next Summer
House of Commons Prepares Free Vote on Assisted Dying Bill
UK Government Bans Trade With Israeli Settlements in Occupied Territories
UK Economy Grows 0.4% in July as Artificial Intelligence Investment Supports Expansion
Andy Burnham Becomes UK Prime Minister After Keir Starmer Resigns
John Lewis Partnership Loss Widens to £124 Million
UK Government to Put White Working-Class Social Mobility at Centre of Equality Policy
McLaren Plans £450 Million Technology Investment Creating 1,000 UK Jobs
UK Chancellor Faces Calls for Wealth Taxes and Public Ownership in Autumn Budget
English Mayors to Gain Powers to Impose Uncapped Overnight Tourist Taxes
JPMorgan’s Jamie Dimon Warns UK Government Against Bank Windfall Taxes
UK Air Traffic Control Outage Cancels More Than 2,000 Flights
UK Imposes Trade Ban on Israeli Settlements in the West Bank
UK Borrowing Costs Surge as Middle East Tensions Push Long-Term Gilt Yields to Highest Since 1998
Buckingham Palace Says Prince Harry and Meghan Will Not Resume Official Royal Duties
UK Treasury Faces Calls to Scrap £100,000 Childcare Support Threshold
Trades Union Congress Urges Labour Government to Rewrite Migration Policy
Riot Police Deployed After Anti-Migrant Protests Turn Violent in Portsmouth
UK Considers Replacing Some Disability Cash Payments With Direct Services
JPMorgan’s Jamie Dimon Warns UK Chancellor Against Higher Banking Taxes
UK Announces New Sanctions Targeting Israeli Settlements in West Bank
Metropolitan Police Investigate Alleged Illegal Donations to Reform UK
UK Charges Wiltshire Man With Assisting Russian Intelligence
UK Orders Urgent Review After Air Traffic Failure Cancels More Than 2,000 Flights
Merz Rebukes AfD Expansion in Saxony-Anhalt
King Charles Confirms Prince Harry and Meghan Will Remain Private Citizens
Labour Selects Former Child Refugee for By-Election in Keir Starmer’s Former Seat
Foreign Private Equity Accelerates Takeovers of London-Listed Industrial Companies
×