In response to the crisis, Sunak announced another £500million to extend the Household Support Fund, which was due to end this month, and a 5p per litre cut to fuel duty rates until March 2023, a move criticised by Labour.
He said he will raise the national insurance threshold by £3,000 to £12,570 a year and cut the basic threshold for Income Tax from 20p in the pound to 19p from 2024.
The chancellor also announced that VAT for homeowners using energy efficient materials such as solar panels and heat pumps will be scrapped for five years.
Following Sunak’s statement, also referred to as the Spring Budget, Reeves said his choices will make the cost of living crisis worse.
Speaking in the Commons, Reeves said: “Today was the day the chancellor could have put a windfall tax on oil and gas producers to provide real support to households, but he didn’t.”
She added: “Today was the day he could have properly scrapped his national insurance hike, but he didn’t.”
Reeves questioned the chancellor on what analysis he had done on the impact of benefits being uprated by less than inflation.
“How many more children and pensioners will drift into poverty because of the choices of this government?” she said.
Reeves then delivered a cutting remark comparing Sunak to 1970s Tory prime minister Edward Heath.
“I understand the chancellor has a portrait of Nigel Lawson above his desk. Well today we’ve got an energy price crisis, record prices at the pumps, inflation is back. The truth is, he’s not Nigel Lawson, he’s Ted Heath with an Instagram account.”
In response to the national insurance threshold increasing, Reeves condemned Sunak for failing to scrap his national insurance hike, which is intended to fund a health and social care levy.
She said: “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 national insurance contributions.
“The changes that he is making beg the question, why did he embark on these changes in the first place, despite the warnings from the Labour party and from many many others.”
On the chancellor’s failure to introduce a windfall tax on oil and gas companies, Reeves accused him of defending “the record profits of the oil and gas producers who themselves admit that they now have ‘more money than they know what to do with.'”
BP has described the energy crisis as a ‘cash machine’ for them, but it is British people who are paying out.
“When I set out Labour’s plans for a windfall tax in January, we estimated that it would have raised £1.2 billion,” Reeves told the commons.
“Now, because of the continued rise in global oil and gas prices, it would today raise over £3 billion. That’s money that could be used to help families, pensioners and businesses.”
Deputy Labour leader Angela Rayner accused the chancellor of leaving people to “fend for themselves.”
She said: “The chancellor hasn’t got a clue. He lives in another world. He’s left households and businesses to fend for themselves in the middle of a devastating cost of living crisis. The Office for Budget Responsibility knows this is the biggest hit to household incomes on record.”
Shadow secretary of state Lisa Nandy noted that there as no mention of ‘levelling up.’
“It’s not good enough,” she said.
The Lib Dems said: “VAT accounts for half of tax paid by the poorest households, compared to 20 per cent of the tax paid by the richest. The chancellor should have cut VAT to give families a £600 a year tax cut.”
The Green Party’s Caroline Lucas also criticised the decision not to bring benefits in line with inflation.
“Inflation accelerates to a 30 year high yet Rishi Sunak fails to use the Spring Statement to bring benefits in line with inflation – people are having to choose between food and heating and he’s cutting money in pockets and pushing people deeper into poverty,” she said.
She added that there was a “climate shaped hole” in the statement.
“Measures needed to tackle climate and cost of living crises are the same,” she said.
“So where was the mass home retrofit revolution that could cut both bills and emissions?”
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