Chancellor Rishi Sunak delivered his spring statement on Wednesday (23 March), setting out plans to tackle the UK’s deepening cost of living crisis.
The statement came amid increasing pressure to help households with spiralling costs after UK inflation soared to a new 30-year high in February.
Rising energy, goods and food prices helped to push inflation to 6.2% in the 12 months to February, Office for National Statistics (ONS) figures revealed this morning, just hours before Mr Sunak’s speech to the Commons.
Consumer Prices Index (CPI) Inflation is up from 5.5% in January, marking the highest level it has been since March 1992 when it stood at 7.1%.
The rise was higher than expected and comes after inflation rose across 10 out of the 12 categories that feed into the index, including food, clothing, footwear, and a range of products and services. Only communication and education did not see an increase, the ONS said.
It is expected that prices will rise further still due to the conflict in Ukraine pushing up already sky-high inflation, adding increases to energy, fuel, commodities and food.
The Chancellor has pledged to “stand by” households and announced fuel duty will be cut by 5p per litre for a year up until march 2023.
He confirmed that the Household Support Fund will be doubled to £1 billion and said the government would cut the basic rate of income tax from 20p in the pound to 19p in 2024.
Mr Sunak also unveiled a £6 billion plan to increase the threshold at which people start paying national insurance contributions (NICs) by £3,000 to £12,570 from July.
But what rising costs will households face from next month despite the latest announcement from the Chancellor? Listed are eight big cost of living expenses that will come into effect from April, and how it will impact bills.
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1. Energy bills
From 1 April, energy bills will rise by £693 per year for millions of households as the energy price cap increases to a record £1,971 per year following soaring gas prices. It will affect around 22 million people who are on their energy supplier’s default tariff. For customers with prepayment meters the price cap will go up by £708 to £2,017.1
2. National Insurance
The Chancellor has raised the threshold at which workers start paying National Insurance contributions to £12,570 in July, claiming it could save some people £330 per year. The change means around 70% of workers will have their tax cut by more than the 1.25 percentage point increase coming in next month. However, National Insurance rates will still increase for everyone from 6 April.
3. Council Tax rises
Chancellor Rishi Sunak announced that councils in England can hike rates by up to 3% without having to hold a referendum and on top, can add an additional 2% which is ring fenced for adult social care. The new tax rates take effect from the start of April to coincide with the new tax year and will remain in place until March 2023. The amount of tax you will pay is determined by your local council and will depend on what band your home falls under.
4. Covid tests
Covid lateral flow tests will no longer be free for the majority of people from 1 April, even if you have symptoms. The government has said spending £2 billion per month on free tests is “not an effective use of taxpayers’ money at this point”. Anyone who needs a test will have to pay between £2 and £5 per individual lateral flow test, or around £20 for a pack of seven, government sources said initially. Care home residents, hospital patients and other vulnerable groups will still be given free tests if they have symptoms.