Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Next year will see ‘enormous easing’ of cost-of-living crisis, Sunak predicts

Rishi Sunak speaking at the CBI annual dinner at the Brewery in London. Picture date: Wednesday May 18, 2022.
Rishi Sunak speaking at the CBI annual dinner at the Brewery in London. Picture date: Wednesday May 18, 2022.

Struggling households will see an “enormous easing” in their budgetary pressures next year due to benefits and pension rises outflanking inflation, according to the Chancellor.

Rishi Sunak was forced to unveil a support package worth at least £15 billion on Thursday, handing every household £400 off their energy bills and boosting support to pensioners and those on low incomes to help the public through the cost-of-living crisis.

The Cabinet minister said he would “continue to act” if energy prices and inflation remain high next year but predicted that budgets should be under less pressure for those in receipt of state pensions and welfare benefits.

The Chancellor made the comments after being asked by Martin Lewis, the founder of the Money Saving Expert website, whether the Treasury might have to step in again in 2023 if the crisis has not abated.

Mr Sunak responded by saying that he had “always been responsive to the situation the country is going through” during his tenure as Chancellor, having previously produced fiscal support packages such as the furlough scheme to help Britain through the coronavirus lockdowns, along with his initial cost of living package in February.

But he indicated that additional support next year was less likely to be required due to pensions and benefits going up a “significant amount” due to inflation, which has reached a 40-year high.

Mr Sunak said: “None of us know what energy prices are going to be next year.

“But what I can tell you now and what people should be reassured by is that the way our system works, benefits and pensions next year are likely – subject to a review that has to happen legally – to go up by quite a significant amount because the inflation rate that decides that is set in September.

“That is likely to be a relatively high inflation rate in September, so that is what will happen next year for everyone’s benefits and pensions, and that increase is most likely to be significantly higher than the inflation we will see next year on all the forecasts that are currently available.

Martin Lewis announcement
Consumer champion Martin Lewis questioned the Chancellor (Kirsty O’Connor/PA)

“So that should give people an enormous sense of reassurance that we are providing the help today to help them get through to that point and that actually next year there is going to be an enormous easing as all their incomes go up considerably compared to what the increase in prices is.”

In the Commons, Mr Sunak said his fiscal package was worth £15 billion.

But officials later conceded that there was a hidden £6 billion cost to the announcement over the next five years because the original £200 rebate for energy bills, which was announced in February and doubled by the Chancellor on Thursday, will no longer be paid back by consumers as originally planned.

During his interview with Mr Lewis, the Chancellor denied that he had been slow to announce support for the public, arguing that Ofgem’s indication that the energy price cap could rise by a further £800 in October had set the plan into action.

“I wanted to wait for enough time so I had a sense of the scale of the problem and then we could size our support appropriately, and that’s what we’ve done,” he told the consumer campaigner.