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 I'm sure that actually fills many of you with some anxiety and some concern about what's 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 won't make it any easier, but what we're 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 they've 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 they'd tell you the same thing.
Now, that doesn't make it any easier, of course I know that, but it's important for you to know we're not alone in dealing with this. I know how important this is and that's 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. That's why I set it as my top priority. It's not easy. Rooting out inflation is not easy.
It requires difficult decisions. It doesn't happen overnight. But, if we don't get on top of it, it would just get worse and it would last longer and that's not going to do anyone any favours, it's 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, that's 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? It's pretty simple. It's because inflation eats into the pounds in your pocket. It's 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 that's why it's so important that we target it and get it down. That's 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 we're going to get this done.
Now, why do I feel confident? What is that plan I'm talking about? Well, three parts to it.
The first is I've 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, I'd love to cut your taxes tomorrow, you'd love that, I'd love that, of course I would, but that's hard to do, because it means I'd have to borrow more money to do it. Another thing is I can't say yes to every single thing that people want me to spend more money on, because that would mean we'd 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 we're trying to figure out how we pay all our fantastic public sector workers, I need to think about what's affordable, what's 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 it's tough for me in the short-term, doesn't make my life easy, anyone who tells you that it would be easy isn't being straight with you. I want to be straight with you, that means I do have to make these difficult decisions, but that's the right thing to do. It's the right thing to do for you and your families in the long run and that's why I'm 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 you've had to pay over the last year have been extraordinary.
Absolutely extraordinary, never seen anything like it. Now, I'm pleased they're going to be starting to come down. Bills are going to come down about 430 quid starting in July, that's good news. Hopefully we are over the worst of this and they will keep coming down after that. But that's just now, we need to make sure this doesn't 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 you'll 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 we're doing is reforming our welfare system to make sure that if you can work then you should be working.
You shouldn't 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 that's something that I think will make a difference too. That's 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, we've 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 family's energy bill. It's worth about £1,500 of support. That is what the Government has done over the past several months, that is the scale of what we've done.
It's enormous, it's like the furlough scheme, quite frankly, in its size.
Now, I know it's bad and you're still looking at these bills saying, oh my gosh, these are massive bills, but that's after we've taken about fifteen-hundred quid off them, so that gives you a sense of how much we've tried to help on energy.
It's not just on energy, we're 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 it's your parents, your grandparents, their state pension has gone up several hundred pounds this year to help them.
Anyone who's on Universal Credit, they're 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, we're trying to help that, so we've cut fuel duty, which will save you about a hundred quid this year for those of you that drive. Also bus fares, we've capped bus fares at £2 outside of London, just to help people as they're getting around. So, all those things, and we can talk later about the other things we're doing, hopefully will just ease the burden as we get through the worst of this inflation challenge. In conclusion, I'll 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 that's not easy, as I said, and anyone who tells you that it's easy or it can happen overnight, they're not being straight with you. I want to be honest with you.
These things are tough, they require difficult decisions, but that's what you should get from your Government, that's what you should get from your prime minister and that's what I'm going to do. I'm going to tell it to you straight and I'm 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, invest more in public services.
All those good things that we want are built on the foundation of getting inflation back down and ultimately that's what I want. I want to build a better country for you, your children, your grandchildren and tackling inflation is the first thing we need to do to build that better future.
Thanks very much for having me.
