FAMILIES will be an average of £2,417 worse off this year despite a £9billion bailout announced by Chancellor Rishi Sunak yesterday.
The Bank of England said it would be the biggest fall in living standards since records began in 1990 after a brutal Black Thursday.
Chancellor Rishi Sunak scrambled to stave off the pain with a £9billion cost-of-living bailout which will cut bills by up to £350 for now.
The average family will still be £2,417 worse off this year thanks to rocketing energy prices, higher National Insurance contributions and soaring interest rates.
The Bank of England said incomes after tax would fall by two per cent this year, the biggest drop since records began in 1990.
And critics blasted PM Boris Johnson’s team — saying a proper Tory government would cut rather than raise taxes.
Mr Sunak said his package would take the sting out of spiralling energy bills, which will go up by nearly £700 in April.
But he told Brits they will have to “get used” to higher energy bills and times will be “tough”.
His warning came as:
- OFGEM said the energy price cap will rise to £1,971 from April, adding nearly £693 to bills. The watchdog also wants to change the rules to raise energy prices four times a year, rather than twice;
- THE Bank of England increased interest rates to 0.5 per cent, and slashed growth predictions;
- THE Bank’s boss Andrew Bailey told workers not to ask for big pay rises to stop prices spiralling;
- LENDERS such as Barclays, Nationwide and Lloyds immediately increased mortgage rates;
- INFLATION was predicted to hit 7.25 per cent in April.
The triple whammy of higher taxes, soaring energy bills and rampant inflation will hit in April in a hellish month for families.
Mr Sunak unveiled his big plan amid rising anger and panic.
All homes will get a £200 discount on energy bills from October so they do not get stung by the higher price cap all at once.
Families will pay this back at £40 a year over the next five years — meaning higher bills will still be around at the next election.
A £150 council tax rebate will be given to all band A to D homes in England from April.
This will not have to be paid back and will benefit 80 per cent of all homes, said the Treasury.
But even after the bailout, families will still be paying an extra £350 in energy bills this year. And they will fork out hundreds more in higher prices and taxes.
Mr Sunak told the Commons: “For me to stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest.
“But what we can do is take the sting out of a significant price shock for millions of families, by making sure the increase in prices is smaller initially and spread over a longer period.”
Warning that bills pain is here to stay, he added: “I don’t have a crystal ball as to what the future holds. But I want to be honest, higher energy prices is something we are going to have to adjust to.
“What we can do is slow that adjustment.”
‘UN-CONSERVATIVE’
Speaking in Blackpool yesterday, Mr Johnson said: “This is a mega package of £9billion, which is I think necessary but it’s huge.”
But furious Tory MPs branded the package “Labour lite”.
David Davis told HOAR: “We should leave people with as much of their own money as possible.
“We are taking too much off people with National Insurance, energy levies and everything else — and giving them pocket money back which just won’t cover costs.”
Referring to 1970s PM Harold Wilson, Mr Davis said: “It’s distinctly un-Conservative. It’s not just Labour lite, it’s Harold Wilson Labour lite.”
Veteran Tory Peter Bone fumed: “Conservatives believe in holding down taxes and putting more money in people’s pockets so they can decide how to spend it.
“Socialists believe in raising taxes and then choosing to give it back in the form of discounts and rebates to selected people the government think need it.”
Senior Tory Tom Tugendhat, who has vowed to run if there is a leadership race, said: “April showers won’t be cheap.
“The sudden surge in the cost of heating will hit families just as the new NIC tax kicks in.
“People need control of their lives by having control of their wallets, that’s why lower taxes matter for every home.” But Mr Sunak insisted the NICs increase was needed to stop NHS waiting lists spiralling.
In a nod to the “buy now, pay later” Swedish tech firm, Labour MP Meg Hillier dubbed Mr Sunak the “Klarna Chancellor” thanks to his scheme that “loads up costs for tomorrow”.
PACKAGE SLAMMED
Shadow Chancellor Rachel Reeves scoffed at the package and said it was “giving with one hand and taking it all back later”.
Labour instead called for a windfall tax on energy suppliers to raise cash to subsidise bills. James Smith, at the Resolution Foundation, said: “Britain’s cost of living crisis is far from over.
“The Bank expects households to experience the largest annual squeeze in living standards on record this year.
“We’ll need stronger economic growth that drives higher wages to get Britain out of this crisis.”
Bank boss Mr Bailey said a “moderation” of wage rises was needed to stop inflation rising.
He added: “It is painful. But we need to see that to get through this problem more quickly.”
