Households and businesses are bracing for rising prices and rising debt despite a raft of measures unveiled by Sir Keir Starmer designed to bring down the rising cost of living.
The prime minister pledged that in an “unstable and unstable world” his government would “protect the British people at home and abroad”.
But he warned that the Strait of Hormuz, crucial to the world’s oil supply and closed as part of the war on Iran, must be reopened to reduce the UK’s growing cost of life.
Sir Keir Starmer chaired a meeting of the Cobra crisis committee on Tuesday to consider the impact of the conflict at home and on the wider economy, but has so far rejected calls for widespread debt relief, without targeted support for those struggling with rising heating oil prices.
It came as he pointed to a reduction in average household energy bills by £117 a year, a rise in the national minimum wage to £10.85 and the national living wage to £12.71, the launch of a £1 billion crisis and resilience fund to help vulnerable households with rising heating oil prices, and a cap on prescription prices.
But the Prime Minister and Chancellor are under pressure to go further, including following European countries and taking action to protect consumers from rapidly rising fuel prices after campaigners accused ministers of treating drivers as a “cash cow for the Treasury”.
Sir Keir said: “I know the public is worried about the conflict in Iran and what it means for them and their families.
“I want to assure them that they have the government on their side, working with partners to lower standards and lower the cost of living.
“Today, millions of people up and down the country will see their energy bills fall by £117, wages rise for the lowest paid, and more support will be available for people who need it most – thanks to the decisions this government has taken.
“But we have to go further to reduce costs, and that means pushing for the de-escalation in the Middle East and the reopening of the Strait of Hormuz. That is the best way we can reduce the cost of living for families and that is my point.”
But council tax, water bills, as well as internet and mobile phone prices, are all set to rise.
From April 1, the total Band D council tax will be £2,392, an increase of £111 or 4.9 per cent, according to the Department for Housing, Communities and Local Government.
Domestic water bills across England and Wales will rise by an average of 5.4 per cent, or £33 a year for the average household.
BT, EE, Plusnet and Virgin Media are all roaming broadband prices at £4 a month, Sky at £3, and Vodafone at £3.50 – adding around £50 a year to bills.
What’s more, one in four Broadband customers are unemployed, paying up to £9 a month more than those on a contract.
However, the price most households pay for energy under Ofgem’s price regulator will fall by 7 per cent, or £117 a year, to £1,641, driven by the government’s promise to cut bills by an average of £150 by removing green subsidies.
Energy bills are also expected to start in July as a result of the Iran war, amounting to around £300 a year.
Meanwhile, businesses, which are not protected by the tariff, are set for a painful increase in their gas and electricity bills, as the disruption of key shipping routes causes prices to rise.
“Hospitality’s tax burden – the highest in the economy – is weakening the sector,” UKHospitality, the British Beer and Pub Association, the British Innkeeping and Hospitality Association Ulster said in a statement.
“The troubling conditions facing the commercial energy market have the potential to accelerate all of these effects.”
The government “should be willing to support vulnerable businesses if they fall into another crisis”, they added.
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