Sunak “does not understand the scale” of cost-of-living crisis, Reeves tells MPs

Rachel Reeves has declared that measures announced by Rishi Sunak in the Spring Statement to help struggling households with rapidly rising bills and prices show that the Chancellor “does not understand the scale of the challenge”.

Responding to the statement from Sunak in parliament this afternoon, the Shadow Chancellor highlighted that the Chancellor has “put up taxes on families and businesses a staggering 15 times” over the past two years and accused the Tories of being “the party of high taxation, because they are the party of low growth”.

The government announced its plan for social care last year, which included raising £12bn a year largely funded through the hike in National Insurance contributions (NICs) in April this year. MPs passed a 1.25 percentage-point increase in September.

“He talks about providing security for working families, but his choices are making the cost-of-living crisis worse, not better,” Reeves said.

The Chancellor told MPs in his statement that sanctions imposed by the UK government on Russia were “not cost free for us at home”, but Reeves stressed that the invasion of Ukraine was not the cause of rising prices in the UK.

“The cost-of-living crisis predates Putin’s attack on Ukraine. In October, inflation was already forecast to be double the Bank of England’s target, and yet the Prime Minister said that fears of inflation were unfounded,” she argued.

The Office for National Statistics released the inflation figures for February this morning, showing that the consumer price index (CPI) rose from 5.5% in January to 6.2% last month – representing a 30-year high.

“There are always choices to be made, like who to tax and who to shield. Despite the Chancellor’s reluctant measures, the facts are that he is still taking money out of people’s purses and wallets with an increase in NICs,” Reeves told Sunak.

Sunak used the Spring Statement this afternoon to unveil a cut to fuel duty of 5p per litre for 12 months, raise the threshold at which workers start paying NICs by £3,000 a year and outline a future 1p reduction in income tax.

He said from July the rate at which people start paying National Insurance would be £12,570 – the same as the income tax personal allowance. The Chancellor also said income tax would be cut from 20p to 19p in 2024.

Sunak described the income tax reduction, not to be implemented for over a year, as a “tax cut for workers, for pensioners, for savers” that would cost £5bn and affect 30 million people.

The Office for Budget Responsibility has estimated 3.8% in growth this year. The body had forecast 6% when Sunak delivered his Budget in October. Inflation is predicted to hit a 40-year high of 8.7% in the final three months of 2022.