Rishi Sunak has caved in to pressure to impose a windfall tax on the soaring profits of oil and gas firms to fund a relief package for households struggling with rising bills.
The Tory chancellor introduced a “temporary targeted energy profits levy” that will mean low income households, pensioners, the disabled will get extra help with winter bills and all households will get a £400 energy bills grant.
Labour said the Chancellor had been “dragged kicking and screaming” into backing its call for a levy on fossil fuel giants which have benefited from high global prices.
Rishi Sunak said the new levy would raise around £5 billion over the next year as he outlined an extra £15 billion of support to households across the UK this winter.
Statement at a glance:
- Low income households - Eight million low-income households will receive a one-off payment of £650
- Pensioners - Extra winter fuel payment of £300
- *Disabled - Six million will receive one off payment of £150
- Every household to receive a £400 grant to replace the £200 repayable loan announced earlier.
Sunak said "we are supporting families with the cost of living with £37 billion, or 1.5% of GDP".
He said: "Our strategy is to combat and reduce inflation over time through independent monetary policy, fiscal responsibility and supply-side activism. We are raising emergency funds to help millions of the most vulnerable families who are struggling right now.
"And all households will benefit from universal support with energy bills of £400, with not a penny to repay.
"In total, the measures I've announced today provide support worth £15 billion. Combined with the plans we've already announced that means we are supporting families with the cost of living with £37 billion, or 1.5% of GDP.
"That's higher or similar than countries like France, Germany, Japan and Italy.
"And I'm proud to say that around three-quarters of that total support will go to vulnerable households."
He said "the vast majority of households" will now receive £550, pensioners will receive £850, and "almost all of the eight million most-vulnerable households in the country will in total receive support of £1,200".
'Big Brexit bonus'
Shadow chancellor Rachel Reeves asked the Government to adopt more of Labour's ideas to help with the cost-of-living crisis.
She told the Commons: "I know that the Chancellor has adopted two of our ideas today, but can I ask why he has not adopted a third: a cut in VAT on energy bills?
"It was once touted as the 'big Brexit bonus', but he has ditched that too."
She claimed Government policies rarely lasted "more than a few months", adding: "We pushed for a windfall tax, they adopted it. We said the buy now, pay later scheme was wrong and now they have ditched it."
Reeves also asked the Chancellor whether households would still need to pay supplier-of-last-resort costs for electricity suppliers who had "gone bust".
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