Sunak Might Further Help With Cost of Living Amid Criticism of UK Mini-Budget

UK Chancellor of the Exchequer Rishi Sunak is mulling additional measures to help Brits weather rising costs of living, UK Education Secretary Nadhim Zahawi has hinted in an interview with Sky News. His statement comes amid reports of tensions between Sunak and Prime Minister Boris Johnson over criticism of the chancellor's original proposals on supporting Brits.

The education secretary defended Sunak's original "mini-budget" unveiled in his Spring Statement earlier this week. Zahawi stressed that planning to spend £22 billion on supporting citizens is the "right thing to do" after the government spent a whopping £400 billion on supporting the British economy during the pandemic.

Zahawi did not elaborate on the specific means that Sunak is considering using to further help with the cost of living. However, media reports have suggested that a rebate on the council tax might be in play by autumn amid expectations that energy prices will continue to soar in October, with the energy price cap hitting almost £3,000 (up £1,029 from the current level of £1,971).

Sunak's Spring Statement contained a reduction on fuel duties by five pence per litre, which would last a year, as well as a reduction on VAT from 5% to 0% for households that have invested in solar panels, heat pumps, or insulation to save on energy consumption. The chancellor also said that the threshold for paying national insurance will rise by £3,000 instead of £300, while the cost of the insurance itself is scheduled to rise by 1.25%.

These measures were slammed as insufficient by the shadow secretary of state for work and pensions, Labour lawmaker Jonathan Ashworth. He accused Sunak of trying to play politics and save some measures for later, for example to win the support of some Conservative lawmakers in a couple of years amid a possible contest for the party leadership.

Ashworth suggested that Sunak should instead cut VAT on energy bills and tax oil and gas companies more.

As the UK expects inflation to hit an unusually high level of 7.4% in 2022, it also faces the prospect of a further increase in energy prices due to soaring costs of buying gas and coal. The prices of these resources, as well as oil, have spiked in the wake of Western sanctions against Russia over its special military operation in Ukraine, as well as amid calls for cancelling purchases of Russian energy resources for good. The US has already implemented a ban on the latter, while Europe plans to abandon Russian gas, oil, and coal by the end of 2022.

At the same time, European governments have failed to elaborate on how they intend to replace the supplies from Russia, which provides up to one third of all gas and upwards of a quarter of all oil imported by the EU. Media reports earlier this year suggested that global energy giants saw no alternatives to Russian resources, at least in 2022. The US expected its domestic energy companies to ramp up their output of oil and gas, but so far this has not happened, with these firms enjoying windfall profits from skyrocketing prices.

According to a poll conducted by Techne for the Sunday Express, 58% of Brits are highly concerned by the rising cost of living, with 67% of all respondents expecting trouble paying for heating and energy. UK citizens plan to cut down on their spending in certain areas in order to deal with the rising costs, the poll shows: 80% said they would avoid large purchases, 55% told Techne that they would reduce spending on leisure activities, while 37% thought they could save some money on clothes.