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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5. Student loans
Student loan repayment thresholds will be frozen from 6 April meaning millions of students and graduates will be forced to pay more under what has been branded a “stealth tax rise”. It comes after the government scrapped plans to raise the thresholds by 4.6%. The Institute for Fiscal Studies warned the freeze will cost £30,000 earners £113 per year more towards their student loan in the next tax year than the government had previously said. It also means students starting university next year will start paying off lands when they earn more than £25,000, down from the current £27,295 per year, and the length of time to repay their debt will be extended from 30 years to 40. | Damir Khabirov - stock.adobe.com
6. Real terms cut to benefits and pensions
Benefits and pensions are both due to rise on 11 April, but only by 3.1%. This is far lower than inflation, which is currently at 6.2%. It is feared inflation could top 8% which works out as little as £10.07 per month extra for those on Universal Credit. MPs pushed through plans earlier this year saying the rise was in line with inflation, but it is only in line with what inflation was last September, before the huge rise in costs. The Chancellor did not announce any increase to benefits despite inflation rising twice as fast as welfare and pensions. | Gregory Lee - stock.adobe.com
7. Childcare costs
Parents on Universal Credit can claim back 85% of childcare costs, but only up to a £646.35 per month cap. This cap has not changed since 2016 and will not rise in April, despite soaring inflation. | Tierney - stock.adobe.com
8. Interest rates
The Bank of England last week raised interest rates for the third time since mid-December, to 0.75% from 0.5%, and warned inflation will now peak at around 8% in April. It is feared inflation could hit double-digits if wholesale energy prices continue to soar amid the Ukraine war. | sewcream - stock.adobe.com