Rishi Sunak will announce large package of measures to combat the cost-of-living crisis on Thursday – a day after the Sue Gray report is unveiled
- Chancellor will meet with the PM to finalise a £10bn financial package of support
- Measures could include energy giant windfall tax and aid for struggling families
- Whitehall insiders suggested Thursday will be the date of the announcement
- Date would coincide with the expected publication of Ms Gray’s Partygate probe
Rishi Sunak appears poised to announce a ‘multibillion package’ of cost-of-living countermeasures just a day after Sue Gray’s Partygate report is published.
The chancellor is due to meet with Prime Minister Boris Johnson to sign off on the rumoured £10bn package, which could include a windfall tax on energy giants and financial assistance for those struggling with surging fuel bills.
Whitehall insiders have suggested Thursday as a possible date for an announcement on fresh action designed to ease the pain felt by British families.
Mr Johnson is reportedly keen to announce the new spending package before Parliament breaks up for its 11-day Whitsun recess, which comes the day after Ms Gray’s report is due to be released in full.
The PM is again fighting for his political life after visual evidence of lockdown breaches in Downing Street started to emerge – with more expected in the senior civil servant’s full report as early as tomorrow.
Should a new financial package be announced on Thursday critics will likely paint it as a ‘dead cat’ strategy from Westminster, designed to take the sting out of the senior mandarin’s probe into lockdown-busting parties held at the height of the pandemic.
The cabinet, which met today for crisis talks over the cost-of-living crisis, also faces fresh pressure after Ofgem’s chief executive Jonathan Brearley warned Britain’s energy price cap could hit £2,800 in a ‘once-in-a-generation event’.
Chancellor Rishi Sunak is due to meet with Prime Minister Boris Johnson to sign off on the rumoured £10bn package, which could include a windfall tax on energy giants and financial assistance for those struggling with surging fuel bills
Mr Johnson is reportedly keen to announce the new spending package before Parliament breaks up for its Whitsun recess, which comes the day after Sue Gray’s Partygate report is due to be released in full
Mr Sunak has told the CBI that support must first be channeled to Britain’s most vulnerable families, but Mr Johnson is understood to prefer methods that will also pacify Tory backbenchers who have demanded more action over recent months.
In addition to further support for lower-paid workers, Mr Johnson would also favour steps such as VAT cuts or accelerating the 1 percentage point tax income cut agreed for 2024.
As of yet the finer points of any financial package have not yet been agreed, reports Sky News.
Officials within the Treasury are understood to be working up plans for a windfall tax that would see energy giants, electricity generators and gas producers hit with a one-off levy.
Jacob Rees-Mogg and energy secretary Kwasi Kwarteng are among the most vocal opponents to the windfall tax, with both believing it will deter significant future investment in Britain’s energy industry.
Ofgem chief executive Jonathan Brearley revealed his latest estimate for the price cap as he gave evidence to MPs on the Business Committee
The grim message will heap pressure on the PM (pictured holding Cabinet today) to announce more help for families struggling to get by as inflation spirals
Ofgem’s expectation for the energy cap in October is £2,800 for a typical family – compared to £1,972 at the moment. Before April it was just £1,277
It comes as struggling Britons were today warned they face another near-50 per cent hike in energy prices in October – as Boris Johnson held a crisis Cabinet on the cost of living.
Ofgem chief executive Jonathan Brearley revealed his latest estimate for the price cap as he gave evidence to MPs on the Business Committee.
He said that although the figures were ‘uncertain’, the situation has deteriorated and the expectation for the new level was £2,800 for a typical family – compared to £1,972 at the moment. Before April it was just £1,277.
Mr Brearley also admitted that there is a risk prices could go even higher if there is more disruption from the standoff with Russia.
Official figures today showed the government tax take soaring 12 per cent year-on-year.
The Treasury raked in £50.2billion in April – £5.5billion higher than the same month last year after the national insurance hike came in.
The data also showed the cost of the £150 council tax rebate trumpeted by Mr Sunak previously has already been clawed back from other local government spending.
Borrowing, excluding state-owned banks, stood at £18.6billion last month – lower than forecast and down by £5.6billion from a year ago.
The figure was still the fourth highest April borrowing since records began and £7.9billion more than in April 2019 before the pandemic struck.
But the data also showed borrowing was revised down by £7.2billion for the financial year to the end of March 2022, to £144.6billion.
While the 2021-22 outturn is the third highest financial year for borrowing on record and above the £127.8billion predicted by the Office for Budget Responsibility (OBR), it may offer some much-needed wiggle room for the Government as it faces growing calls to help cash-strapped households.
PAYE tax income was up from £15billion in April 2020 to £17.8billion this year, while VAT raised an extra £1.6billion. Compulsory social contributions rose by £1.4billion.
The figures showed that interest payments on the Government’s borrowing stood at £4.4billion last month, which was lower than the £4.9billion seen a year earlier.
However, interest payments are expected to soar, due to rocketing levels of the Retail Prices Index measure of inflation used on Government debt payments, with June data set to show the full scale of the recent jump in inflation.
He said: ‘The price changes we have seen in the gas market are genuinely a once-in-a-generation event not seen since the oil crisis of the 1970s.
‘In any conceivable circumstances, there would have been supplier failure.
‘However, it is clear to me and it is clear to the current Ofgem board that, looking over all of our institution’s history, had financial controls been in place sooner we’d have likely seen fewer suppliers exit the market, and for that on behalf of Ofgem and its board I would like to apologise.’
The grim prediction will heap pressure on the PM to announce more help for families struggling to get by as inflation spirals, with the number of families suffering ‘fuel stress’ potentially doubling to 10million.
Giving evidence to the same committee afterwards, Business Secretary Kwasi Kwarteng said bill payers had to ‘wait and see’ what extra help would be on offer to cope with rising energy costs.
‘Both the Prime Minister and the Chancellor have said that there will be further announcements in respect of giving assistance to people,’ he told MPs.
He told the Business, Energy and Industrial Strategy Committee that £9.1 billion had already been allocated to help with rising bills. But faced with the prospect of the price cap rising to £2,800, Mr Kwarteng was pressed on what more could be offered.
‘What we see now isn’t the full picture. Both the Prime Minister and the Chancellor have said there is more to do and we have to just wait and see what is forthcoming.’
He added: ‘It’s a difficult time, we all know that people are under huge stress. We also know that the cost of living is a very real issue and nobody is suggesting that the Government can pay the entirety of the energy bill.
‘What we are committed to is giving support and that’s what we are doing.’
Mr Kwarteng again made clear his distaste for a windfall tax, but stressed it was up to Mr Sunak.
Responding to the eye-watering cap estimate, shadow chancellor Rachel Reeves said: ‘This is extremely concerning and will cause huge worry for families already facing soaring bills and rising inflation.
‘How many more alarm bells does the Chancellor need to hear before he acts? The government have got to get a grip on this crisis and to protect families and our economy.
‘Yet again, Labour calls urgently on the government to bring forward an emergency budget, with a windfall tax on oil and gas producer profits to lower bills for families.’
The Treasury raked in £50.2billion in taxes in April – £5.5billion higher than the same month last year after the national insurance hike came in
The government’s tax take is now significantly higher than it was before the pandemic
Inflation has already soared to its highest level for 40 years, peaking at 9 per cent in April, due to eye-watering increases in energy tariffs, and is forecast to reach double-figures by the end of the year before falling back.
A think-tank has warned that almost 10million households could find themselves in ‘fuel stress’ this winter if the price cap rises to around £2,800.
The Resolution Foundation analysis suggested the number of families living in fuel stress – defined as spending at least a tenth of their total budgets on energy bills alone – would rise from five million to 9.6 million.
Jonny Marshall, senior economist at the Resolution Foundation, said: ‘UK households are set for another huge jump in the energy bills this October – just when the need to heat their homes grows – which could push up to ten million families into fuel stress.
‘The sheer scale and depth of Britain’s cost-of-living crisis means the Government must urgently provide significant additional support.
‘The fact that the crisis is so heavily concentrated on low-and-middle incomes households means it’s clear how the Government should target policy support.
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