Everyone in the country is to get an extra £200 - on top of the £200 already announced - and none of the money will need to be repaid, the Chancellor has said. The cost of living handout in October will be accompanied by hundreds of pounds for people on benefits, pensioners and people with disabilities.
Benefits will also be 'uprated' in September, the Chancellor has said. He said: “We are meeting our responsibility to provide the most help to those on the lowest incomes. I believe that is fair and I’m confident the House will agree.
Describing previous Government plans to provide all households with £200 off their energy bills from October, with the cost repaid over five years, he said: “Since then the outlook for energy prices has changed, I’ve heard people’s concerns over the impact of these repayments on future bills, so I’ve decided that those repayments will be cancelled.
“This support is now unambiguously a grant,” he said, adding “the £200 of support for household energy bills will be doubled to £400 for everyone”.
Rishi Sunak said high inflation is causing 'acute distress' for people in the UK as he set out new measures to address the cost of living crisis, and a tax on 'extraordinary profits' by oil and gas companies. The Chancellor of the Exchequer said: "I want to reassure everybody, we will get through this."
He said a new levy will be charged temporarily, on oil and gas companies while their profits remain high - with the money raised used to help UK people. He said the profits of electricity companies are also being investigated.
Mr Sunak said people on the lowest incomes - more than 8million households - will get a one-off cost of living payment of £650. DWP and HMRC will make the payments in July and this autumn, direct to people's banks - with no ned to apply for them.
This autumn, pensioners will get £300 as an extra one-off payment. Disabled people will get an extra £150. Local authorities in England are also to get an extra half £500million to support families in their areas.
Mr Sunak said this would help a third of households. And he said there would be 'universal support' for everyone in the country. The £200 loan that was to be handed out in October will be doubled to £400 and will not now be repayable.
Mr Sunak also said, subject to a review by the Work and Pensions Secretary, that benefits will be uprated by this September’s Consumer Prices Index (CPI), noting: “On current forecasts it’s likely to be significantly higher than the forecast inflation rate for next year.
“Similarly, the triple-lock will apply for the state pension.”
He said the country is now experiencing the highest rate of inflation in 40 years. He said lockdowns in China and supply chain disruptions are contributing to the situation - along with a 'European energy price shock'.
Mr Sunak told MPs: “We need to make sure that for those whom the struggle is too hard and for whom the risks are too great they are supported.
“This Government will not sit idly by while 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.
“And I want to reassure everybody that we will get through this, we have the tools and the determination we need to combat and reduce inflation, we will make sure the most vulnerable and least well-off get the support they need at this time of difficulty, and we will turn this moment of difficulty into a springboard for economic renewal and growth.”
Rishi Sunak said the temporary windfall tax on oil and gas giants will raise “around £5 billion of revenue over the next year”, telling MPs: “So that we can help families with the cost of living and it avoids having to increase our debt burden further because there is nothing noble about burdening future generations with evermore debt today because politicians of the day were too weak to make the tough decisions.”
For people on the lowest incomes, Mr Sunak said: “Over 8 million households already have income low enough for the state to be supporting their cost of living through the welfare system.”
He added: “Right now they face incredibly difficult choices so I can announce today we will send directly to around 8 million of the lowest income households a one-off cost-of-living payment of £650, support worth over £5 billion to give vulnerable people certainty that we are standing by them at this challenging time.
“DWP will make the payment in two lump sums, the first from July, the second in autumn, with payments from HMRC for those on tax credits following shortly after.”
Mr Sunak said the payments will be sent straight to people’s bank accounts.
Rishi Sunak said uprating of benefits in the same timeframe could only be done for those receiving Universal Credit, adding: “Our policy will provide a larger average payment this year of £650 whereas uprating the same benefits by 9% would be worth only on average £530.”
On help for pensioners, Mr Sunak told the Commons: “From the autumn we will send over eight million pensioner households who receive the winter fuel payment an extra one-off pensioner cost-of-living payment of £300.
“Disabled people also face extra costs in their day-to-day lives, like having energy-intensive equipment around the home or workplace.
“So to help the six million people who receive non-means tested disability benefits we will send them, from September, an extra one-off disability cost-of-living payment worth £150.
“Many disabled people will also receive the payment of £650 I’ve already announced, taking their total cost-of-living payments to £800.”
Sunak said the Government would also provide “universal” support.
He said: “We are meeting our responsibility to provide the most help to those on the lowest incomes. I believe that is fair and I’m confident the House will agree.
“But there are many other families who do not require state support in normal times, they are also facing challenging times. Is it fair to leave them unsupported? The answer must surely be no.
“While it is impossible for the Government to solve every problem we can and will ease the burden as we help the entire crisis through the worst of this crisis.”
Describing previous Government plans to provide all households with £200 off their energy bills from October, with the cost repaid over five years, he said: “Since then the outlook for energy prices has changed, I’ve heard people’s concerns over the impact of these repayments on future bills, so I’ve decided that those repayments will be cancelled.”
“This support is now unambiguously a grant,” he said, adding “the £200 of support for household energy bills will be doubled to £400 for everyone”.
The timing of the Chancellor’s announcement, the day after the publication of the embarrassing Sue Gray report on the partygate scandal, has led to claims that ministers were seeking to avoid further damaging headlines about Boris Johnson’s No 10 operation.
But the Prime Minister’s chief of staff Stephen Barclay insisted the decision to announce the package was in response to Ofgem’s indication that the energy price cap would rise by more than £800 in October.
He told Sky News: “In terms of the timing, firstly we don’t control the timing of the Sue Gray report. The timing of that is shaped by the Met Police investigation.
“What we’ve always said is, in terms of the fiscal response, we wanted to see from the Ofgem guidance what the full impact would be in the autumn on families so that we can get the design of that package right.
“We’ve had that guidance this week from Ofgem. That is why the Chancellor is coming forward today.”
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With MPs away from Westminster on a half-term break next week, Mr Barclay said the “parliamentary timetable” was also a factor.
Ofgem’s chief executive Jonathan Brearley indicated this week that the energy price cap will increase to £2,800 in October.
The Times reported the previously announced £200 loan on energy bills will be replaced with a grant that will not have to be paid back, with the discount possibly increasing to as much as £400.
Ministers have spent months criticising the idea of a windfall tax because of its potential impact on investment.
But on Wednesday a Tory source said the arguments had been “tested rigorously” within both the Treasury and wider government.
“There’s a high threshold that any package that we bring forward delivers more gain than pain, that the gain is worth the pain, that it does not jeopardise the investment,” he said.
“You don’t introduce random taxes that make the economic environment unpredictable.”
Offshore Energies UK, which represents the offshore oil and gas industry, has warned a one-off tax on North Sea firms would see higher prices and do long-term damage to the sector.
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The Chancellor will need to be careful that any extra help he puts in to the economy does not add further to inflation, which is running at a 40-year high.
As well as the possible impact on inflation, the Chancellor’s ability to help beyond the £22 billion package already announced will also be restricted by the state of the nation’s finances.
A Treasury spokesman said: “The Chancellor was clear that as the situation evolves, so will our response, with the most vulnerable being his number one priority.”
The Prime Minister said the hundreds of billions poured in to dealing with the Covid pandemic had left a “very difficult fiscal position”.
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.
