Business

Sunak pledges to cut £5.5bn in ‘wasteful’ government spending to tackle cost of living crisis

Rishi Sunak is pledging a £5.5bn crackdown on Whitehall waste as he faces pressure to tackle the cost of living crisis in his mini-budget.

Ahead of his spring statement on Wednesday, the chancellor claims the efficiency savings will both curb inflation and fund vital public services.

“During these challenging times it’s vital that every single penny of taxpayers’ hard-earned cash is being spent well,” Mr Sunak said.

“The current level of waste across government is simply not acceptable – which is why we’re doubling down on wasteful spending and launching an efficiency drive to make £5.5bn worth of savings.

“That money will then be pumped directly into the world-class public services that the British people deserve.”

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Families choosing between food and power

Sunak under pressure to help struggling families

But the chancellor is under pressure from opposition parties and Tory backbenchers to help struggling families by cutting taxes, including slashing fuel duty by up to 5p.

More on Cost Of Living

Other moves Mr Sunak may announce on Wednesday include raising National Insurance thresholds to offset the tax hike due next month and increasing benefits such as Universal Credit.

In his speech at the Conservatives’ spring conference in Blackpool, Boris Johnson said Vladimir Putin’s attack on Ukraine was “pushing up the cost of living, hitting us at the pumps and in our fuel bills”.

And he added: “And so we must respond, and we’ve got to do everything we can to help people with their daily costs, help people with the cost of living.”

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PM challenged on energy bills by Starmer

Labour claims the chancellor has a cost of living treasure trove worth £21bn in additional tax revenue because prices have been soaring so high.

Shadow chancellor Rachel Reeves is demanding a one-off windfall tax on oil and gas profits, axing VAT on home energy bills for a year, ditching the “buy now, pay later” energy scheme and halting the NICS rise.

Announcing his waste crackdown, Mr Sunak says it will be spearheaded by a new “Efficiency and Value for Money Committee”, which he will chair, aimed at preventing fraud and spending errors.

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Ukraine war affects cost of living

NHS expected to find £4.75bn in savings

The NHS savings target will be doubled to 2.2%, freeing up £4.75bn, the chancellor claims, and “quangos” will be expected to find savings of at least £800m.

Ms Reeves claims total VAT receipts in 2021/22 could be up to £5.1bn higher than the Office of Budget Responsibility forecast at the time of the budget last October.

She also claims the Treasury will receive an additional £12.2bn from oil and gas profits in the coming year and a windfall tax would bring in a further £3.7bn, £2.5bn more than when Labour first proposed it in January.

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February – ‘Further debt’ for disabled people facing rising costs

“The chancellor is facing a historic moment,” said Ms Reeves.

“He can grasp the enormity of the cost of living crisis and choose to halt the NICs rise, and back a one-off windfall tax on booming oil and gas producer profits to cut home energy bills by up to £600, as Labour would do.

“There’s so much extra in the Treasury coffers because people are more out of pocket paying higher prices and facing worrying bills.

“With millions concerned about the cost of living and the future, this is the worst possible time to hike taxes on working people and businesses.”

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