Chancellor Rishi Sunak has announced a string of new measures aimed at helping millions of households across the country deal with the soaring cost of living. It comes as the UK faces record-high levels of inflation and rapidly rising energy and gas bills, forcing many households and families to fall into poverty.
The new key cost of living announcements have been targeted at the most struggling households across the country. Today (Thursday), the Chancellor announced key cost of living measures to help tackle inflation and provide aid to those struggling the most with rising bills.
"We have three specific tools available to combat and reduce inflation, Mr Sunak Said. "We are using them all."
He added: "Independent monetary policy, fiscal responsibility and supply side activism."
Mr Sunak continued: "First, our primary tool is a strong independent monetary policy. Since control of monetary policy was taken out of the hands of politicians 25 years ago, inflation has averaged precisely 2 per cent.
"It is right that the Bank of England are independent, and I know the Governor and his team will take decisive action to get inflation back on target and ensure inflation expectations remain firmly anchored."
On a 'responsible fiscal policy', Mr Sunak said: "Fiscal support should be timely, temporary, and targeted. Timely because we need to help people when the shock is at its worse.
"Targeted because unconstrained stimulus will make the problem worse and temporary because if we do not meet our fiscal rules and ensure the public finances are resilient in the longer run, we create even greater risks on inflation, interest rates and the trend rate of economic growth."
Windfall tax - temporary energy levy - investment allowance
Mr Sunak will impose a windfall tax on soaring profits of oil and gas firms. The funds raised from this will help create a support package for households struggling with rising bills.
A rate of 25pc will be charged to companies via a temporary energy levy, which the Chancellor claims will increase investments.
He said: "Like previous governments, including Conservative ones, we will introduce a temporary targeted energy profits levy, but we have built into the new levy a new investment allowance similar to the super-deduction that means companies will have a new and significant incentive to reinvest their profits.
"The new levy will be charged on profits of oil and gas companies at a rate of 25pc. It will be temporary and when oil and gas prices return to historically more normal levels, the levy will be phased out."
Shadow chancellor Rachel Reeves previously welcomed the Chancellor’s U-turn on a windfall tax, after months of Tory opposition to Labour’s calls for such a measure. She asked: "Why has it taken so long? Why have families had to struggle and worry while he dragged his feet?"
The Chancellor added that the tax will raise 'around £5bn 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."
Cost of living payments
Mr Sunak announced that around eight million households will receive a one-off cost of living payment of £650, which will be paid in two lump sums by the DWP. 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 eight million of the lowest-income households a one-off cost-of-living payment of £650, support worth over £5bn 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 account. Pensioners who receive winter fuel payments will receive an extra payment of £300, while disabled people who receive benefits will also receive extra money.
Mr Sunak added: "Our policy will provide a larger average payment this year of £650 whereas uprating the same benefits by 9pc 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."
Scrapping grant payments
The final announcement was the scrapping of grant repayments for people who received an extra £200 to help pay off their energy bills. The grant will be doubled to £400, which will also not have to be repaid.
Mr Sunak concluded by saying: "I know that there are other pressures. I am not trying to claim we have solved the entire problem for everyone. No government could.
"But I hope that when people hear the significant steps we are taking, the millions we are helping, they will feel some of the burden eased. Some of the pressures lifted, and they will know this Government is standing by them. Supporting people with the cost of living is only one part of our plan for a stronger economy.
"A plan that is creating more jobs, cutting taxes on working people reducing our borrowing and debt, driving businesses to invest and innovate more, unleashing a skills revolution, seizing the benefits of Brexit and levelling up growth in all parts of the United Kingdom.
"The British people can trust this Government because we have a plan for a stronger economy."
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