hancellor Rishi Sunak has announced he will cut fuel duty by 5p per litre and raise the National Insurance threshold by £3,000 amid a cost-of-living crisis as he delivered his Spring Statement.
He also said he will cut the basic rate of income tax from 20 pence in the pound to 19 but not until 2024.
Mr Sunak said the Government wanted people to know they will "stand by them" in dealing with rising living costs as a result of disruptions to global supply chains and energy markets, combined with the economic response to the war in Ukraine.
Fuel duty will be cut by 5p per litre in what Mr Sunak said was “the biggest cut to all fuel duty rates - ever.”
The threshold for paying National Insurance will increase by £3,000 from July.
He also announced he will scrap VAT on energy efficiency measures such as solar panels, heat pumps and insulation installed for five years, and double the Household Support Fund to £1 billion.
On Wednesday morning it was announced that UK inflation had reached the highest level in 30 years.
The chief executive of Creative UK, Caroline Norbury MBE, said “critical steps” are needed in advance of the Autumn budget to help the creative industries.
She said rising inflation would have “a debilitating impact” on freelancers and people starting out in their career and they needed support and added that she wanted to see tax relief for the creative industries “expanded” in the next budget.
Hospitality leaders warned “thousands of jobs could be lost” after the Chancellor “missed an opportunity” to halt VAT increases next month.
It came as bosses in the sector and retail industry criticised Rishi Sunak for a lack of business rates support for firms being hit heavily by soaring costs.
Kate Nicholls, chief executive of trade group UKHospitality, said the decision to push forward with plans to increase VAT on food, soft drinks and event tickets from 12.5% to 20% next month “might prove fatal” for some firms.
The Equality Trust charity said the statement was “an inadequate response to the pressures of the cost of the living crisis on the most vulnerable”.
The Institute for Fiscal Studies said the chancellor has failed to help the “very poorest” despite warnings of the biggest hit to living standards since the 1950s.
After the spring statement, IFS director Paul Johnson said that “what really stands out today is what’s missing”.
“In the face of what the OBR calls the biggest hit to household finances since comparable records began in 1956-57 he has done nothing more for those dependent on benefits, the very poorest, besides a small amount of extra cash for local authorities to dispense at their discretion,” Mr Johnson said.
“Their benefits will rise by just 3.1% for the coming financial year. Their cost of living could well rise by 10%.”
Former shadow chancellor John McDonnell warned "lives will be put at risk" as he urged Rishi Sunak to "double the winter fuel allowance".
The MP for Hayes and Harlington said: "Can we be absolutely clear that benefits and pensions are still going to rise by only 3.1% whilst inflation is predicted to be between 7% and 10%, that's a cut for some of the poorest in our society."
He added: "The people I'm desperately worried about in my constituency are those who are forced to live on benefits, largely through disability and ill health, and poorer pensioners.
"We know the energy prices are rising rapidly, the assistance he's provided so far will not enable them to cope and I think when we get to November they will be freezing in their own homes and lives will be put at risk.
“One simple solution is to double the winter fuel allowance."
In graphs produced by the Office for National Statistics and the Office for Budget Responsibility, Britons are set for a fall of 2.2 per cent, in terms of their real household disposable income.
That figure is set to the lowest since 1956, the graph shows.
The Office for Budget Responsibility (OBR) has said the tax burden will still hit the “highest level since the 1940s”.
The OBR said net tax rises plus the “more tax-rich composition” of forecasted economic activity raises the tax burden from 33 per cent of GDP in 2019/20 to 36.3 per cent in 2026/27.
Its fiscal outlook found this to be the “highest level since the late 1940s”, adding that this “is a 3.3 per cent of GDP increase in the tax burden in the space of seven years”.
Labour’s shadow climate secretary Ed Miliband tweeted: “The rise in energy bills is a national emergency. Rishi Sunak thinks £200 of loans is the answer.
“He just doesn’t get it. Millions face fuel poverty and the Chancellor shrugs his shoulders.
“We won’t stop fighting for more support, including a windfall tax on oil and gas giants.”
Chief executive of First Time Buyer Group Lynda Clark has said people looking to buy their first home are now budgeting for “eye-watering price increases” rather than adding to their savings.
She said: “At the same time, record house prices mean it’s increasingly difficult for first time buyers to step onto the ladder. We need some flexibility and decisive action from the spring statement other than small support for household costs.
“There is a serious risk the cost-of-living crisis could have a direct impact on first time buyers’ affordability, – delaying their plans to buy, which could do more harm than good.”