Prime Ministers Office 10 Downing Street
The Prime Ministers plan to halve inflation and to support you with the cost of living. - YouTube
Yesterday you will have heard some news about inflation, today you may have seen what the Bank of England has announced with interest rates and Im sure that actually fills many of you with some anxiety and some concern about whats going on and what does that mean for you and your families.
I am here to tell you that I am totally, 100% on it, and it is going to be okay and we are going to get through this.
That is the most important thing I wanted to let you know today. You should know, and I know this wont make it any easier, but what were grappling with here is something that many countries around the world are all grappling with at the same time as we are right now. So, if you look at interest rates in Australia, in Canada, in New Zealand, across the world, they are all at high levels. Actually, interest rates in Europe are the highest theyve been for twenty years, because they are all grappling with inflation in the same way that we are. Many of you may have friends or family in those places and if you spoke to them theyd tell you the same thing.
Now, that doesnt make it any easier, of course I know that, but its important for you to know were not alone in dealing with this. I know how important this is and thats why at the beginning of the year I made a speech and I set out my five priorities for the country that I wanted to deliver as your prime minister. The first of those was to halve inflation. I know how important this is. Thats why I set it as my top priority. Its not easy. Rooting out inflation is not easy.
It requires difficult decisions. It doesnt happen overnight. But, if we dont get on top of it, it would just get worse and it would last longer and thats not going to do anyone any favours, its not going to be good for you and your families in the long run and, even though it means I have to make some difficult decisions, thats the type of prime minister I am, because I want to do the right thing for your and your families in the long-term.
Now, why does inflation matter, why did it matter to me, why did I set it as my top priority? Its pretty simple. Its because inflation eats into the pounds in your pocket. Its as simple as that. It makes us, everybody, poorer.
It means prices go up. It means your savings get eroded. It puts jobs and livelihoods at risk and thats why its so important that we target it and get it down. Thats why I said I wanted to halve it on its way to getting it back down to 2% where it belongs. I am absolutely confident that if we hold our nerve and stick to our plan, we will do that, and you should feel the same confidence that I do, because we are going to get through this and were going to get this done.
Now, why do I feel confident? What is that plan Im talking about? Well, three parts to it.
The first is Ive got to make sure government is doing everything that it needs to do and that means being responsible with our borrowing, because we cannot in a situation like this borrow too much money, because that just makes everything worse. That means, much as I would love to, Id love to cut your taxes tomorrow, youd love that, Id love that, of course I would, but thats hard to do, because it means Id have to borrow more money to do it. Another thing is I cant say yes to every single thing that people want me to spend more money on, because that would mean wed have to borrow money to do all of that. That means I have to make some difficult choices, I have to prioritise, the same as all of you do in your household budgets, I have to do the same thing too.
It means when were trying to figure out how we pay all our fantastic public sector workers, I need to think about whats affordable, whats responsible, again so I can manage our borrowing. Now, none of those things that I talked about are easy. Those are all difficult decisions that I have to make, but if I just gave into the easy thing every time, that would just mean more and more government borrowing.
That just puts fuel on the fire, makes inflation worse, pushes up interest rates even higher. So even though its tough for me in the short-term, doesnt make my life easy, anyone who tells you that it would be easy isnt being straight with you. I want to be straight with you, that means I do have to make these difficult decisions, but thats the right thing to do. Its the right thing to do for you and your families in the long run and thats why Im going to stick to the course and manage our borrowing.
Now, the second part of the plan is making sure we tackle all those areas where inflation is particularly bad. Energy is an obvious one. The bills that youve had to pay over the last year have been extraordinary.
Absolutely extraordinary, never seen anything like it. Now, Im pleased theyre going to be starting to come down. Bills are going to come down about 430 quid starting in July, thats good news. Hopefully we are over the worst of this and they will keep coming down after that. But thats just now, we need to make sure this doesnt happen again and that they keep coming down.
That means we need to have more energy, so we are investing more in renewable energy like offshore wind, building new nuclear power stations, but also making sure that we get more energy here at home from the North Sea, more oil and gas, which we are going to need for the next few decades as we transition to a cleaner future, so we are investing in that too.
Food is another area where your weekly shop has gone up far too much in the past few months especially, so we are looking at the supermarkets, making sure that they are behaving responsibly and fairly when it comes to pricing all those products, to make sure we are easing the burdens on your weekly shop. Then, when it comes to jobs, most of you probably reading the paper youll have seen that, you know, businesses everywhere really need people to work at the moment and are finding it hard to find them almost everywhere, so what were doing is reforming our welfare system to make sure that if you can work then you should be working.
You shouldnt be able to just be at home, so we are going to reform our welfare system to make sure we are doing that.
At the same time we are also cutting the cost of childcare to make it easier for those working parents who want to work to be able to go back to work after they have children, because thats something that I think will make a difference too. Thats the second part of the plan - going after all those specific things. The third part of the plan is helping those who most need help through the worst of this. Now, how have we done that? Most importantly, weve helped with your energy bills.
You might not know this, but we actually made a decision, I made a decision when I was your chancellor, to tax the excess profits that the energy companies are making because of the war in Ukraine and use that money to help pay all your energy bills. So that support is worth about half of your typical familys energy bill. Its worth about 1,500 of support. That is what the Government has done over the past several months, that is the scale of what weve done.
Its enormous, its like the furlough scheme, quite frankly, in its size.
Now, I know its bad and youre still looking at these bills saying, oh my gosh, these are massive bills, but thats after weve taken about fifteen-hundred quid off them, so that gives you a sense of how much weve tried to help on energy.
Its not just on energy, were also providing extra help for people who really need a bit of extra help, so those on the lowest incomes, the National Living Wage has gone up, hopefully many of your wages have gone up like the National Living Wage over the last year, because we want to make sure those on the lowest incomes see that benefit. Pensioners, whether its your parents, your grandparents, their state pension has gone up several hundred pounds this year to help them.
Anyone whos on Universal Credit, theyre also getting an extra 900 this year of support, so those who need a little bit of extra help are really getting that help from the Government.
At the same time, the things that you guys do a lot, which is travel, were trying to help that, so weve cut fuel duty, which will save you about a hundred quid this year for those of you that drive. Also bus fares, weve capped bus fares at 2 outside of London, just to help people as theyre getting around. So, all those things, and we can talk later about the other things were doing, hopefully will just ease the burden as we get through the worst of this inflation challenge. In conclusion, Ill end where I started really.
This is obviously a challenge that many countries are facing right now but we are on it. We are on it and we are going to get through it. Now thats not easy, as I said, and anyone who tells you that its easy or it can happen overnight, theyre not being straight with you. I want to be honest with you.
These things are tough, they require difficult decisions, but thats what you should get from your Government, thats what you should get from your prime minister and thats what Im going to do. Im going to tell it to you straight and Im going to do the things that we need to do to bring inflation down. I am confident that we are going to do that. The reason that we can feel better about the future is because once we get it down, that is the foundation on which we can build a better economy. That is how we will create more jobs and be able to pay people more, inves