London Daily

Focus on the big picture.
Wednesday, Oct 29, 2025

Treasury considers ways to ease cost of living in spring statement, instead of doing the obvious: cut taxes!

Treasury considers ways to ease cost of living in spring statement, instead of doing the obvious: cut taxes!

Reluctant to make big fiscal changes, chancellor Rishi Sunak considers tax adjustments and fuel duty cut.
The Treasury has drawn up a range of options to help with the cost of living crisis – including a 1p cut to income tax, raising the national insurance threshold and a significant cut to fuel duty.

But government sources said Rishi Sunak, the chancellor, was still reluctant to make big fiscal changes.

Sunak is under huge pressure from Conservative MPs to help households struggling with high petrol prices and inflation when he delivers the spring statements on Wednesday.

Options considered by the Treasury include a promised 1p cut in the basic rate of income tax, potentially coming in at the autumn budget or next year, which would largely offset the rise in national insurance.

Sunak could also set out a pathway to raising the national insurance threshold to the same rate as income tax, from £9,600 to £12,750 – a Tory manifesto promise.

He has also been considering a cut in fuel duty, with Labour backing a reduction of up to 5p in response to soaring fuel prices and a concerted campaign from some Tory MPs.

Labour has also been calling for a windfall tax on fossil fuel companies profiting from high global oil and gas prices, which Sunak has resisted so far.

However, some Tory backbenchers think there is still some scope for him to U-turn on this, given Russia’s invasion of Ukraine has changed the economic picture and caused a spike in prices.

On Friday, Sunak dropped a heavy hint that he will try to help with the cost of living but also stressed that there were some things the government cannot change and highlighted “global inflationary forces”.

One Treasury source said an income tax cut was still the source of “internal negotiation” but confirmed it was under discussion. Sunak said on Friday that tax rises were “done” and signalled he wanted to cut taxes before the next election.

But another official said Sunak was still resisting significant interventions or commitments for the autumn. “He’s literally been ‘auto-no’ to anything suggested,” the source said.

A cut in fuel duty would be enthusiastically welcomed by many backbench Conservatives, but some campaigners are warning against it. Analysis by the New Economics Foundation (Nef) shows just 7% of the benefit goes to the poorest fifth of households.

Russia’s invasion of Ukraine has piled added pressure on Sunak to ease the cost of living in Britain. The Bank of England has said inflation could hit 10% later this year and it is unable to prevent rising energy prices from making people poorer, leaving it up to the chancellor to act.

The independent Office for Budget Responsibility is likely to provide Sunak with the scope to act when it produces new forecasts for the public finances on Wednesday.

Lower than expected unemployment means the OBR will reduce its estimate of the long-term damage from the pandemic, while higher inflation has increased the amount of money Sunak will get from freezing tax allowances.

The Institute for Fiscal Studies said this week the Treasury had been expecting to get £8bn a year from the move but would actually receive £20.5bn.
Newsletter

Related Articles

0:00
0:00
Close
UK Retail Inflation Slows as Shop Prices Fall for First Time Since Spring
Next Raises Full-Year Profit Guidance After Strong Third-Quarter Performance
Reform UK’s Lee Anderson Admits to 'Gaming' Benefits System While Advocating Crackdown
United States and South Korea Conclude Major Trade Accord Worth $350 Billion
Hurricane Melissa Strikes Cuba After Devastating Jamaica With Record Winds
Vice President Vance to Headline Turning Point USA Campus Event at Ole Miss
U.S. Targets Maritime Narco-Routes While Border Pressure to Mexico Remains Limited
Bill Gates at 70: “I Have a Real Fear of Artificial Intelligence – and Also Regret”
Elon Musk Unveils Grokipedia: An AI-Driven Alternative to Wikipedia
Saudi Arabia Unveils Vision for First-Ever "Sky Stadium" Suspended Over Desert Floor
Amazon Announces 14 000 Corporate Job Cuts as AI Investment Accelerates
UK Shop Prices Fall for First Time Since March, Food Leads the Decline
London Stock Exchange Group ADR (LNSTY) Earns Zacks Rank #1 Upgrade on Rising Earnings Outlook
Soap legend Tony Adams, long-time star of Crossroads, dies at 84
Rachel Reeves Signals Tax Increases Ahead of November Budget Amid £20-50 Billion Fiscal Gap
NatWest Past Gains of 314% Spotlight Opportunity — But Some Key Risks Remain
UK Launches ‘Golden Age’ of Nuclear with £38 Billion Sizewell C Approval
UK Announces £1.08 Billion Budget for Offshore Wind Auction to Boost 2030 Capacity
UK Seeks Steel Alliance with EU and US to Counter China’s Over-Capacity
UK Struggles to Balance China as Both Strategic Threat and Valued Trading Partner
Argentina’s Markets Surge as Milei’s Party Secures Major Win
British Journalist Sami Hamdi Detained by U.S. Authorities After Visa Revocation Amid Israel-Gaza Commentary
King Charles Unveils UK’s First LGBT+ Armed Forces Memorial at National Memorial Arboretum
At ninety-two and re-elected: Paul Biya secures eighth term in Cameroon amid unrest
Racist Incidents Against UK Nurses Surge by 55%
UK Chancellor Rachel Reeves Cites Shared Concerns With Trump Administration as Foundation for Early US-UK Trade Deal
Essentra plc: A Closer Look at a UK ‘Penny Stock’ Opportunity Amid Market Weakness
U.S. and China Near Deal to Avert Rare-Earth Export Controls Ahead of Trump-Xi Summit
Justin time: Justin Herbert Shields Madison Beer with Impressive Reflex at Lakers Game
Russia’s President Putin Declares Burevestnik Nuclear Cruise Missile Ready for Deployment
Giuffre’s Memoir Alleges Maxwell Claimed Sexual Act with Clooney
House Republicans Move to Strip NYC Mayoral Front-Runner Zohran Mamdani of U.S. Citizenship
Record-High Spoiled Ballots Signal Voter Discontent in Ireland’s 2025 Presidential Election
Philippines’ Taal Volcano Erupts Overnight with 2.4 km Ash Plume
Albania’s Virtual AI 'Minister' Diella Set to 'Birth' Eighty-Three Digital Assistants for MPs
Tesla Unveils Vision for Optimus V3 as ‘Biggest Product of All Time’, Including Surgical Capabilities
Francis Ford Coppola Auctions Luxury Watches After Self-Financed Film Flop
Convicted Sex Offender Mistakenly Freed by UK Prison Service Arrested in London
United States and China Begin Constructive Trade Negotiations Ahead of Trump–Xi Summit
U.S. Treasury Sanctions Colombia’s President Gustavo Petro over Drug-Trafficking Allegations
Miss USA Crowns Nebraska’s Audrey Eckert Amid Leadership Overhaul
‘I Am Not Done’: Kamala Harris Signals Possible 2028 White House Run
NBA Faces Integrity Crisis After Mass Arrests in Gambling Scandal
Swift Heist at the Louvre Sees Eight French Crown Jewels Stolen in Under Seven Minutes
U.S. Halts Trade Talks with Canada After Ontario Ad Using Reagan Voice Triggers Diplomatic Fallout
Microsoft AI CEO: ‘We’re making an AI that you can trust your kids to use’ — but can Microsoft rebuild its own trust before fixing the industry’s?
China and Russia Deploy Seductive Espionage Networks to Infiltrate U.S. Tech Sector
Apple’s ‘iPhone Air’ Collapses After One Month — Another Major Misstep for the Tech Giant
Graham Potter Begins New Chapter as Sweden Head Coach on Short-Term Deal
Ecuadorian President Daniel Noboa Alleges Poison Plot via Chocolate and Jam
×