'Fiscal punch in the face' coming if government doesn't help with soaring bills, Martin Lewis warns

Martin Lewis says Rishi Sunak needs to set out more support. Credit: HMT/PA

Money Saving Expert Martin Lewis has warned a "fiscal punch in the face" is coming for struggling families in April if the government does not address the forthcoming rise in household energy bills.

And Labour is urging the chancellor to rethink the National Insurance increase, which will come around the same time as the energy cap rise, in order to avoid making the cost-of living crisis worse.

Rishi Sunak, preparing to set out his UK finance plans for the next year in his spring statement on Wednesday, is thought to be considering a fuel duty cut of 5p, to address the sky-high petrol and diesel prices.

But both Labour and Martin Lewis say Mr Sunak would need to announce big changes in his finance plans for the upcoming year if he wants to help poorer households weather what is expected to be an expensive 2022.

Mr Lewis recently raised alarm bells when he warned on Sunday: “I’m the Money Saving Expert. I’m virtually out of tools to help people. Money management will not solve this. We need political intervention."

Household energy bills

Energy bills could rise by £693 for households on direct debit tariffs and by £708 for those on prepayment plans when the new price cap rises by 54% on April 1.

Martin Lewis, speaking at Parliament's business and energy committee, said: “On April 1, people are going to feel a fiscal punch in the face when that goes up for someone on typical use to £1,971. That’s a £700 rise.

'A fiscal punch in the face': Martin Lewis on the cost of living increase

“Those seven weeks have included the highest ever rates in history, a completely unprecedented level both because of the structural changes that have been going on in the market because of Covid and because of the dreadful situation in Ukraine.”

“On October 1, the price cap then is based on an assessment period of energy prices between February 1 and the end of July.

“We are seven weeks through that 26 week period.He said household energy bills could have risen by an average of £1,300 within a year, when the cap rises again in October.

And government support for struggling households - a £150 council tax rebate for houses in bands A-D in April, and a £200 discount on bills in the form of a loan from October - "is clearly not enough", he said.

He said a £350 package of support "to cover a £1,300 rise, well you don't need to be the Money Saving Expert to work out, 'no that is not enough' ".

National Insurance

National Insurance contributions will increase by 1.25% just five days after the energy cap rises.

It is estimated the hike somebody on a salary of £30,000 will end up paying is around £251 more in contributions over the course of a year.

Mr Sunak and Prime Minister Boris Johnson have both been adamant in the past that a rise would not be delayed as the extra cash would be used to fund the care sector.

The chancellor is expected to go ahead with the rise but campaigners have urged him to offset it with a cut in income tax - although this would create fury among business leaders, with businesses having to match national insurance payments by employees.

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Cost of fuel

Labour shadow business secretary Jonathan Reynolds said a suggested 5p per litre cut in fuel duty would save families an average of just £2 per tank of fuel, insufficient when petrol prices have consistently set new records this month.

The RAC said drivers are in a "tough place when it comes to being able to afford to drive" and it told Mr Sunak it was "crucial" for him to take "decisive and meaningful action".

But the RAC said there are signs that fuel retailers could be "finished passing on their increased wholesale costs for the time being" prices, with "very slight reductions" in both petrol and diesel on Monday.

Figures from data firm Experian Catalist show the average cost of a litre of petrol at UK forecourts on Monday was 166.6p, down from 167.0p on Sunday. The average cost of a litre of diesel fell from 179.0p to 178.7p over the same period.

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