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Daily Mirror
Daily Mirror
Politics
Tim Hanlon

Brits earning £45,000 a year will struggle with energy bills, admits Chancellor

Brits earning £45,000 a year could still find it difficult to cope with the spiralling cost of living this winter, the Chancellor has now admitted.

While there has been alarm over the impact of rising energy prices for the poorer in society, the struggle is set set to be far more reaching said Nadhim Zahawi with it likely to be "really hard" for middle-earners.

The energy price cap is set to rise by 80% by October, pushing the average household's yearly bill up from £1,971 to £3,549 and industry regulator Ofgem warned the Government it must act urgently to "match the scale of the crisis we have before us".

Of the contenders to replace Boris Johnson as Prime Minister, Liz Truss is reportedly ready to give extra winter fuel payments to pensioners to ease the burden - despite in the past insisting she was focused on tax cuts rather than "handouts".

While her rival Rishi Sunak has said he will provide additional support targeted at the most vulnerable.

Energy bills could go up by as much as 80% this October (STOKE SENTINEL)

Mr Zahawi has declared he is working "flat out" to draw up options for a plan of action for the next PM so they can "hit the ground running" when they take office in September.

"My concern is there are those who aren't on benefits," he told the Daily Telegraph.

"If you are a senior nurse or a senior teacher on £45,000 a year, you're having your energy bills go up by 80% and will probably rise even higher in the new year - it's really hard.

"If you're a pensioner, it's really hard. So Universal Credit is a really effective way of targeting, but I'm looking at what else we can do to make sure we help those who really need the help. We're looking at all the options."

He is also reportedly refusing to rule out freezing the energy cap as suggested by Labour, insisting "nothing is off the table".

But he continued: "My concern about it is that it is universal. You're helping wealthier households, households like mine, where we can withstand the additional pressure of high energy costs, and that takes away from your ability to be resilient over the long term.

"It would be about £100 billion in about 18, 24 months. If I targeted that help, I'd be able to deliver more help to the most vulnerable."

Mr Zahawi said that his "concerned" about people who are not on benefits and how they will cope (Getty Images)

He also reportedly said he is weighing up potential action to help small firms including Covid-style cuts to VAT and business rates to support the hospitality and leisure sectors.

"If we don't help those small and medium enterprises, my concern is the scarring effect, the longer-term scarring effect on the economy," he said.

"So what we did on business rates, what we did on VAT for particular sectors like hospitality. So we're working up all those options to look at those.

"And of course Liz Truss has talked about removing a moratorium on the green levies for a couple of years. We're looking at that as well, which will help everyone with about £150."

The Foreign Secretary, who is the frontrunner to be the next prime minister, has promised "decisive action" to deliver "immediate support" if she wins the keys to No 10.

But she has so far been vague about what form this assistance might take besides slashing green levies on energy bills and reversing the controversial national insurance hike.

She has argued it is not "right" to announce her full plan before the contest is over or she has seen all the analysis being prepared in Whitehall.

The average household's yearly bill is set to go up from £1,971 to £3,549 (AFP via Getty Images)

While Ms Truss has promised those "feeling the squeeze" that help is "on its way", Labour has claimed her plans to combat the cost-of-living crisis would leave four million families "out in the cold".

Assuming that any further direct support for families introduced by Ms Truss would be rolled out only to those on benefits, the party calculated that millions with children would miss out on the extra help.

A couple with one child both earning the average wage on a full-time basis and living outside of London would not be eligible for additional support in this scenario, Labour said.

The party also claimed that, depending on where they live, a couple both on the minimum wage and working full time with one child may not see any benefit.

It said there were almost 100 areas where families on an average wage would lose out in this situation, including Teesside, Ipswich, Darlington and Colchester.

Labour has argued that its own plan to freeze energy bills this winter would save someone on the minimum wage more than £40 a week.

Mr Zahawi said that Universal Credit will be used to help the elderly deal with rising prices (Getty Images)

But the cost of its proposals have been called into question by fact-checkers, who claimed the party had not taken into account that people use more energy in the winter, causing it to underestimate the plan's price tag by at least £5 billion.

Labour sources disputed charity Full Fact's analysis and said the party had costed its plans based on consultation with Ofgem.

With bills set to spiral further, the Government has faced united calls to increase its support for households who are facing "the bleakest of winters".

Ofgem's chief executive Jonathan Brearley said the incoming prime minister and new Cabinet should "provide an additional and urgent response to continued surging energy prices".

The regulator said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic, and had been driven still higher to record levels by Russia slowly switching off gas supplies to Europe.

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