Rishi Sunak is set to announce a new support package to help tackle the cost of living crisis affecting millions of households across the country. The Chancellor is expected to unveil his new plan on Thursday (May 26) in the wake of the fallout from the partygate scandal.
It is widely expected that a windfall tax on oil and gas companies will generate funds to support the most vulnerable. It will be part of a set of measures expected to be worth around £10bn, which could also include a higher discount on heating to help low-income households deal with soaring energy bills.
Measures have also been discussed to increase the winter fuel allowance.
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It comes after Ofgem chief executive Jonathan Brearley indicated that the energy price cap will increase to £2,800 in October. The Chancellor must also be careful to not introduce a package which could further raise inflation which is already at a record high.
Mr Sunak is also hindered somewhat by the the nation's finances which the Prime Minister indicated is in a 'very difficult fiscal position'. due to the coronavirus pandemic. At a Downing Street press conference, he acknowledged households 'are going to see pressures for a while to come' as a result of the spike in global energy prices and supply chain problems following the pandemic.
He added: "We will continue to respond, just as we responded throughout the pandemic. It won’t be easy, we won’t be able to fix everything.
"But what I would also say is we will get through it and we will get through it well.” Environment Secretary George Eustice told LBC: "We are treading a very difficult path here because if we just borrow lots more money and throw it at the situation we could compound inflation, we could make the situation worse and see prices rise further.
"So we have got to try to dampen that inflation and that means showing some restraint but, equally, helping people, particularly those on the lowest incomes, who will struggle with some of these price rises." Mr Eustice also suggested that consumers are already switching to cheaper brands in order to cut their grocery bills.
He previously suggested that is a way to save money but insisted: "I wasn’t lecturing or telling anyone what they should do.
"What I was pointing out is that last time we had this price spike, in 2008, what actually happened was that household spending on food didn’t rise by as much as food prices and that’s because people did change their shopping habits, they bought different items and in some cases, yes, they downtraded to some of the value brands.
"That’s just an observational comment; it’s what some families did in 2008 and it is what people will be doing now."
Despite rumours that a windfall tax will be introduced, chief executive of energy company SSE, Alistair Phillips-Davies, told BBC Radio 4’s Today programme: “I don’t think this Government is going to impose a windfall tax on successful sectors that are delivering for the UK and creating jobs and making sure that we avoid these crises in the future by bringing in lower-cost energy from indigenous sources.”
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