Chancellor Rishi Sunak under pressure during Spring Budget to help Kentites pay their bills

As the cost of living crisis hits struggling households, Chancellor Rishi Sunak is coming under increasing pressure during next week’s budget to offer help to those who are finding it increasingly difficult to pay their bills.

Our political editor Paul Francois outlines the main challenges and possible options to address them.

Chancellor Rishi Sunak is coming under increasing pressure during next week’s Budget to offer help to those who are finding it increasingly difficult to pay their bills. Archival photo

Soaring energy prices:

The government has already tabled proposals it says will ease the burden of rising energy prices, but did so before Russia invaded Ukraine.

The main promises were a £150 rebate on council tax bills, but only for those in bands A to D, and a loan of £200.

One option could be to increase the discount, but most authorities already send invoices with details of the £150 discount and how it works, which could be problematic.

That said, the boards administering the rebate will have established provisions for dealing with remittances.

Charities are already warning that beleaguered families must decide whether to eat or keep warm.

Charities are already warning that beleaguered families must decide whether to eat or keep warm.  Archival photo
Charities are already warning that beleaguered families must decide whether to eat or keep warm. Archival photo

The Chancellor could choose to wait until the fall when the cap on the energy regulator will be reviewed.

The Institute for Fiscal Studies (IFS) suggests that the impact of the Russian invasion of Ukraine on energy prices means these measures could now protect consumers from just a fifth of the increase to to come.

Fuel costs:

Eye-popping increases at the petrol pump sparked an understandable angry reaction from motorists and hauliers, with the specter of a liter of petrol pushing potential costs up to £2. Proposed fuel tax increases have now been cut 11 times in a row, and in its budget last October it said it was reversing the proposed increase “to keep the cost of living down”.

Expect no changes here.

Fuel costs at the pump continued to rise.  Archival photo
Fuel costs at the pump continued to rise. Archival photo

National Insurance:

Could there be room for changes here? Some believe plans to raise National Insurance rates by 1.25% on April 1 could be delayed, a move many would welcome.

The option of delaying the implementation of a renewable energy tax could also be considered – to the detriment of the Tories’ green credentials.

There are already concerns that the increase could have a disproportionate and detrimental impact on low wages.

This is because workers pay 12% national insurance on earnings between £9,564 (£9,880 from April) and £50,268. However, income above this amount attracts a rate of only 2%.

Some believe plans to raise National Insurance rates by 1.25% on April 1 could be delayed.  Archival photo
Some believe plans to raise National Insurance rates by 1.25% on April 1 could be delayed. Archival photo

Defense expenditure:

If the conflict between Ukraine and Russia has shown anything, it is the unpredictable nature of international politics.

Few predicted that what is, whatever the name, a war would break out and the UK would actively arm a party.

If ever there was a need to increase the defense budget, now may be the time.

Reports suggest the chancellor could use the budget as a springboard for a fresh look at the defense budget without necessarily any concrete commitments.

If ever there was a need to increase the defense budget, now may be the time.  Archival photo
If ever there was a need to increase the defense budget, now may be the time. Archival photo

As it stands, the government spends just under 2% of UK GDP on defence.

Hospitality:

There was not much goodwill between the hospitality industry and the Chancellor last year, with Mr Sunak being criticized for his lack of support for struggling hotels, bars, restaurants and clubs which were suddenly facing another unexpected and unplanned lockdown just before Christmas, a key trading time of the year.

The Chancellor has responded with a £1billion business grant package and help with sick pay. One option could be to extend this aid for a short period to help small businesses.

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