The Budget and the annual Finance Bill
This briefing examines the way that Parliament scrutinises the Government's proposals for taxation, set out in the annual Budget statement.

This briefing covers rising prices including food and energy inflation, Government support, and how the cost of living affects households.
Rising cost of living in the UK (2 MB , PDF)
This briefing will be updated later this month to include cost of living measures announced in the 2023 Budget as well as OBR forecasts.
The cost of living increased sharply across the UK during 2021 and 2022. The annual rate of inflation reached 11.1% in October 2022, a 41-year high, before easing in subsequent months to 10.1% in January 2023. High inflation affects the affordability of goods and services for households.
Consumer prices, as measured by the Consumer Prices Index (CPI), were 10.1% higher in January 2023 than a year before.
Increases in the costs of consumer goods, underpinned by strong demand from consumers and supply chain bottlenecks, have been factors causing rising inflation. Food prices have also been rising sharply over the past year.
Another important driver of inflation is energy prices, with household energy tariffs and road fuel costs increasing. From January 2022 to January 2023, domestic gas prices increased by 129% and domestic electricity prices by 67%. Gas prices increased to record levels after Russia launched its full-scale invasion of Ukraine and continued to rise during much of 2022 due to cuts in Russian supply. Electricity prices are linked to gas prices and have followed a similar trend.
On 8 September the then Prime Minister announced a new Energy Price Guarantee would be introduced on 1 October, to cap typical consumption at £2,500 a year. It was initially intended to last for two years, but the Chancellor announced on 17 October that it would only last sixth months. In the Autumn Statement 2022 he announced that the EPG would be increased in April 2023 to £3,000 for typical annual consumption and last to the end of March 2024.
As well as the humanitarian, military and political impact of Russia’s invasion of Ukraine, there are implications for the world economy. For the UK, a key economic effect of the conflict is higher energy prices. After rising following the invasion, gas prices on international markets have fallen steadily, and oil prices (in US dollars) have been falling since June.
As a result, road fuel prices and household energy bills in the UK have increased. Energy bills for businesses have also increased and are expected to continue to rise. Details of new Government support for businesses, the Energy Bill Relief Scheme, were announced on 21 September.
Russia and Ukraine are also large producers and exporters of agricultural products, such as wheat, and some metals. These products have become more expensive on international markets, leading to increases in food and materials prices in the UK, although global commodity prices have eased in recent months.
Consumer price inflation rose in many countries during 2021 and 2022. Pandemic-related supply shortages were a major factor. As the global economy recovered from its pandemic-related recession, there was increased demand for products – especially consumer goods – and materials. The conflict in Ukraine also led to higher commodity prices (mainly in the first half of 2022), pushing up inflation around the world.
In January 2023, the UK’s annual inflation rate of 10.1% was higher than in some comparable economies such as France (6.7%), the Eurozone average (8.5%) and the US (6.1% in December).
The inflation rate is typically expressed as the percentage change in consumer prices compared with one year before. For example, the most recent data compares prices in January 2023 with prices in January 2022.
This means that changes to prices that occurred more than a year ago, before January 2022 in this example, “drop out” of the annual inflation rate. economists expect this effect to lead to the inflation rate generally falling during 2023, as some past price increases “drop out” of the annual comparison.
There are also signs that some global price pressures are subsiding. For instance, supply bottlenecks are easing and wholesale gas prices have fallen on financial markets (though this will take time to pass through to bills for households and businesses).
Both the OBR and Bank of England expect the annual inflation rate to ease in 2023, as the steep rises in energy prices seen in 2022 fall out of the annual comparison. The OBR expects inflation to slow to 3.8% by Q4 2023, while the Bank expects it to slow to around 4%. The Bank notes the domestic inflationary pressures “are likely to remain strong” in coming quarters.
A slowing or falling inflation rate means that prices are rising more slowly than before; it does not mean that price levels are actually falling. For example, if the annual inflation rate drops from 10% to 4%, this means prices are still 4% higher compared with a year before.
The Government announced the Energy Price Guarantee (EPG) on 8 September, which will cap the unit of cost of energy. A household’s bill will continue to be influenced by how much energy they use, but a typical household will save £900 this winter, according to the Government.
The EPG might cost the Government around £25 billion in 2022/23, while a similar scheme for non-domestic users of energy (businesses, charities, public sector, etc) might cost a further £18 billion.
Other Government support announced during 2022 includes:
According to the Office for National Statistics, 94% of adults in Great Britain reported an increase in their cost of living in January-February 2023.
The OBR expects real post-tax household income to fall by 4.3% in 2022-23, the biggest fall since comparable records began in 1956.
Low-income households spend a larger proportion than average on energy and food, so are more affected by price increases. Food bank charities are reporting an increase in demand: the Trussell Trust reported that in April-September 2022 they provided almost 1.3 million emergency food parcels, a third more than in the same period in 2021 and 50% more than pre-pandemic levels.
The Bank of England has been raising interest rates to try and lower the inflation rate below its 2% target. This has led to higher borrowing costs for households, notably on mortgage interest rates. The reaction on financial markets to the mini Budget of 23 September has led mortgage providers to further increase interest rates on the mortgages they offer. Over the past few months, mortgage rates have come down again, though remain well above their levels of mid-2022.
Rising cost of living in the UK (2 MB , PDF)
Commons Library publications on the rising cost of living in the UK, including cause of inflation, the effect on households, and Government support.
This briefing examines the way that Parliament scrutinises the Government's proposals for taxation, set out in the annual Budget statement.
A Westminster Hall debate has been scheduled for 2.30pm on Tuesday 21 March on energy support for farms. The debate will be opened by Carla Lockhart MP.
This paper answers FAQs on new government support schemes for energy bills, including: the Energy Price Guarantee, Energy Bills Support Scheme, Energy Bills Discount Scheme, Energy Bill Relief Scheme and Alternative Fuel Payments.