Rishi Sunak has promised big business he will “cut your taxes” as the chancellor offered little hope for extra help for hard-pressed households.
In a sign the Tory response to the cost of living crisis will be a bout of trickle-down economics, Sunak used a speech to the CBI on Wednesday evening to call on businesses to “invest, train and innovate more” – and a tax cut awaits in the next budget to “encourage you to do all those things”.
Trickle-down proponents argue that reducing the burden on business allows them to power the economy forward, ultimately benefitting everyone.
Calls are mounting for Sunak to take urgent action on the cost-of-living crisis as official figures showed inflation soaring to a 40-year high.
Charities, think tanks and opposition politicians said the government needs to do more for the poorest households, who are being hit the worst under the crisis.
Speaking at the annual dinner of the business organisation, Sunak said he “stands ready” to do more to help families cope with the impact of rising inflation, as he faces pressure to cut soaring energy bills with a windfall tax on oil and gas producers.
He outlined a three-point plan to help with the cost of living, boost growth and invest to deliver long-term prosperity.
The chancellor told businesses “we are on your side” and called on them to help increase productivity and enterprise, adding: “We need you to invest more, train more, and innovate more.
“In the autumn budget we will cut your taxes to encourage you to do all those things. That is the path to higher productivity, higher living standards, and a more prosperous and secure future.
“Our role in government is to cut costs for families. I cannot pretend this will be easy. The next few months will be tough, but where we can act, we will.
“We have provided £22 billion of direct support, and we are going further. In October, we’re cutting energy bills by a further £200.
“In just a few weeks’ time, the national insurance threshold will increase to £12,500.
“That’s a £6 billion tax cut for working people, and of course as the situation evolves our response will evolve.
“I have always been clear, we stand ready to do more.”
Households are struggling under the weight of prices that are increasing faster than at any point in more than a generation, data showed on Wednesday.
The Office for National Statistics (ONS) said Consumer Prices Index inflation rose to 9% in the year to April, up from an already high 7% in March.
It was the fastest measured rate since records began in 1989, and the ONS estimates it was the highest since 1982.
A large portion of the rise was due to the price cap on energy bills, which was hiked by 54% for the average household at the start of April.
Already ahead of the figures being released, surveys showed people were switching to cheaper alternatives and trying to control how much energy they use.
Much of the jump is down to the high cost of energy on international markets, especially gas, although oil prices have also shot up.
This has also pushed up the price of many other items, including food, which are made or transported using gas and oil-based products. The war in Ukraine has also hit global food supplies.
Just getting around, including to work, has become more expensive for households too. Prices for both petrol and diesel are at record highs, although recently soaring prices for second-hand cars eased off slightly in April.
Meanwhile, restaurant prices are also increasing, rising 1.8% in just a month.
Shadow chancellor Rachel Reeves said the news is “a huge worry for families already stretched”.
She added: “We can’t wait any longer for action from this out-of-touch government.
“Today, Labour force a vote for an emergency budget and for a plan for growth.”