Eight million of Britain’s poorest households will receive a one-off £650 ‘cost of living payment’ – and there will be an effective windfall tax on the profits of oil and gas companies, the Chancellor has announced.
Rishi Sunak said the household support package was worth more than £5billion and would come in two lump sums, one in July and one in August.
In his speech to the Commons, the Chancellor did not specifically refer to a windfall profit tax, but said he would introduce a “temporary targeted energy profit tax” on oil and gas companies.
The new levy will be levied on the profits of oil and gas companies at a rate of 25%, Mr Sunak said.
“It will be temporary. And when oil and gas prices return to historically more normal levels, the levy will be phased out with a sunset clause written into the legislation,” he said.
Ministers had resisted Labor proposals for a windfall tax, saying it would deter investment, but with inflation hitting a four-decade high and warnings from the Bank of England of worse to come, the pressure to act has intensified.
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Mr Sunak’s announcement comes a day after Sue Gray’s damning report into lockdown parties in Downing Street, laying bare details of drunken parties, altercations and karaoke at the heart of government at a time when COVID-19 restrictions were in place.
Prime Minister’s Chief of Staff Steve Barclay earlier brushed off the suggestion that the launch of the cost-of-living policy was intended to distract from the partygate scandal, during an interview on Sky News.
He instead pointed a forecast earlier this week by regulator Ofgem that an increase in its price cap is expected to cause the typical annual energy bill to rise by more than £800 to £2,800 this autumn.
Soaring energy prices have already pushed 9% inflationits highest level since the early 1980s, and the The Bank of England has warned it could exceed 10% later in the year and a recession looms.
Bank Governor Andrew Bailey also warned ‘apocalyptic’ food prices rise as war in Ukraine hits supplies of wheat and cooking oil.
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