Rishi Sunak provides £1,000 to eight million households in cost-of-living boost

Rishi Sunak provides £1,000 to eight million households in cost-of-living boost

26 May    Finance News
Rishi Sunak Commons

More than eight million households will receive more than £1,000 in additional support to help with the cost-of-living crisis as part of a £15 billion package, Rishi Sunak has announced.

The chancellor confirmed that every household in Britain would receive a £400 discount on their energy bills this October.

He also announced that eight million households on means-tested benefits would receive £650 in direct payments, while pensioners who qualify for the winter fuel payment will receive an additional £300. Those who are disabled will receive an extra £150.

The chancellor will fund the move in part with a 25 per cent windfall tax on the profits of oil and gas companies that would raise £5 billion this year. But he said that companies that reinvested their profits in Britain would get back 90 per cent of the new tax in relief.

He added that the government was investigating extending the windfall tax to electricity generators, which have also benefited from higher energy prices, but this would not come into effect immediately.

Households will still face huge rises in their bills even with the additional support. The energy regulator, Ofgem, has said that household energy bills will increase by another £800 in October, to £2,800. This, on top of last month’s increase, will mean that average bills have risen by 119 per cent in a year.

Sunak told the Commons that the measures were necessary because high inflation was causing “acute distress for the people of this country”. He said the government would not “sit idly by whilst there is a risk that some in our country might be set so far back they might never recover . . . This is simply unacceptable and we will never allow that to happen.”

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But he warned that the government’s support to deal with the cost-of-living crisis needed to be “timely, temporary and targeted” or risk fuelling inflation still further.

Among the most eye-catching measures was the £400 energy bill discount that will go to every household in the country.

In the spring Sunak said that all households would receive a £200 payment but this would be clawed back in higher bills over the next five years. This clawback has now been scrapped and the payment doubled.

“There are many other families who do not require state support in normal times [but] they are also facing challenging times,” Sunak said. “Is it fair to leave them unsupported? The answer must surely be No.”

The intervention was welcomed by leading economists. Torsten Bell, head of the Resolution Foundation, said: “Chancellor almost doubles the level of energy support to over £30 billion (£15 billion extra today), and fills the huge gap in previous announcements with large targeted support for those hardest hit. Things to quibble with, but this is big and very welcome indeed.”

Paul Johnson, the head of the Institute for Fiscal Studies, said: “Big, expensive package from Rishi Sunak. In conjunction with tax rises already in place this is hugely redistributive — taking from high earners and giving to the poor.”

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Rishi Sunak provides £1,000 to eight million households in cost-of-living boost

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