Rishi Sunak says 'no law' could fix cost-of-living crisis as Ian Blackford says he should deliver emergency budget or resign

Rishi Sunak has claimed “no law” could fix the cost-of-living crisis amid demands he deliver an emergency budget or resign as the UK’s inflation rate hit a 40-year high.

The Chancellor claimed “global forces” meant the problem was not going anywhere, but vowed to do more when he could.

The declaration came as Ian Blackford asked if the Prime Minister supported the Chancellor’s comment that acting now would be “silly” and called for him to be sacked.

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In a speech to the CBI on Wednesday evening, Mr Sunak said: "There is no measure any government could take, no law we could pass, that can make these global forces disappear overnight.

"The next few months will be tough. But where we can act, we will."

The Chancellor also 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.

Boris Johnson speaks at Prime Minister's Questions. Picture: BBC ParliamentBoris Johnson speaks at Prime Minister's Questions. Picture: BBC Parliament
Boris Johnson speaks at Prime Minister's Questions. Picture: BBC Parliament

“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.”

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Figures released earlier that day had shown UK inflation – the rate at which prices rise – jumped to 9 per cent in the 12 months to April. It is the highest level it has reached since 1982.

Analysis from the Institute of Fiscal Studies (IFS) also revealed the country’s poorest households faced inflation rates of 10.9 per cent because they spent more of their total household budget on gas and electricity.

Heidi Karjalainen, a research economist at the IFS, said: "Continuing pressures, such as the war in Ukraine, are likely to push Ofgem’s October tariff cap, as well as other prices including food prices, even higher later this year. We are likely to be in a prolonged period during which poorer households are facing rates of inflation even higher than the headline figures would suggest."

Mr Sunak’s speech followed a Prime Minister’s Questions session that saw Mr Blackford alleged Boris Johnson had been briefing the Treasury has been blocking further financial support.

Mr Blackford called on the Prime Minister to “stop sniping from the sidelines”, and warned the “poorest are punished the most” over the cost-of-living crisis.

He said: “People didn’t need to see this morning’s official statistics to know that we’re experiencing the highest inflation in 40 years. They know it because they’re living with it.

“Families can’t afford food. They can’t pay their bills. And we’re only at the beginning.

"And as always under the Tories, the poorest are punished the most.

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"For months people have been crying out for support, but month after month a distracted Downing Street has failed to lift a finger to help.

“Does the Prime Minister still support his Chancellor’s insulting statement that acting now, in this cost-of-living emergency, would just be silly?”

Mr Johnson insisted he supported what Mr Sunak was doing, and listed off measures such as Universal Credit and support for the cost of energy.

He said: “I support the Chancellor’s work in lifting the living wage by a record amount, by making sure people on Universal Credit pay £1,000 less in tax, by putting another £22bn into supporting people with the cost of living, £9.1bn already to help people with the cost of energy.

“And above all I support what he has done to deliver a strong economic foundation which makes all that possible.”

The SNP Westminster leader responded by saying the Chancellor should be sacked if he doesn’t deliver an emergency budget.

He said: “The Prime Minister just confirmed it would be silly to intervene, because the Tories only response to this cost-of-living crisis has been insults and inaction.

“For weeks the Prime Minister has been briefing that it is the Treasury who are to blame for blocking financial support for struggling families.

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“Well Prime Minister, it’s time to stop sniping from the sidelines. If this Chancellor won’t deliver an emergency budget, it’s time for the Prime Minister to sack the Treasury, to sack the Chancellor, and to put somebody else in office that will act.”

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UK inflation hits highest for 40 years after hike in energy prices

Earlier in the session Labour leader Sir Keir Starmer had pressed Mr Johnson over a windfall tax.

He said: “On the day when inflation went to 9 per cent, the highest for 40 years, I think the watching public, the least they can expect is a Prime Minister who concentrates on the cost-of-living crisis. Clearly he just can’t make his mind up.”

Sir Keir listed Tory MPs and company bosses who support a windfall tax, adding: “And on the other side? The member for North East Somerset [Jacob Rees-Mogg], when he’s not sticking notes on people’s desks like some overgrown prefect, is dead set against it.

“When is he finally going to get a grip, stand up for the people of Britain and get on the right side of the argument?”

Mr Johnson suggested his Government was against higher taxation measures, but declined to rule them out entirely.

"If we have a strong economy, we will be able to look after people as we have done during Covid and as we will do in the aftershock of Covid,” he said.

Mr Johnson added: “Of course we will look at all sensible measures, but we will be driven by considerations of growth, investment and employment.”

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The lack of action prompted an angry response from Labour’s shadow secretary of state for work and pensions Jon Ashworth.

He said: "Runaway inflation is punishing for poorer families and pensioners who are effectively exposed to a higher rate because a greater proportion of their income is taken up by food and energy costs.

"With energy bills going through the food and weekly shop getting more expensive we need action how to help struggling households.

"Instead Rishi Sunak dithers on a windfall tax and pushed ahead with deep real terms cuts to Universal Credit and pensions."

Wednesday also saw criticism from Mr Johnson’s own MPs, with Conservative Sir Bernard Jenkin demanding a £13.5bn “summer package”.

He said: “A summer package to rescue the most vulnerable households is needed to avoid real financial distress and personal anguish and to support economic demand of the most vulnerable households, or we are creating possibly a worse recession than is already expected.

“Like after the unforeseen Covid crisis, the Treasury must adapt to this unexpected war in Europe and accept this new global energy and economic crisis also requires a very substantial policy response.”

Sir Bernard suggested the £20 uplift in Universal Credit “should immediately be restored”, adding: “The abolition of VAT on domestic fuel would abolish a regressive tax which actually hurts the poorest households the most. We can do this now we’re outside the EU.”

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