Rishi Sunak has suggested wealthy people who do not need financial assistance from the Government to pay their rising energy bills should donate a new ￡400 handout to charity.
The Chancellor yesterday announced every household across the UK will receive a ￡400 grant to help take the sting out of increasing energy costs as part of a new ￡15 billion cost of living support package.
The universal nature of the payment has attracted criticism but Mr Sunak insisted this morning that he believes it is the best way of getting help to millions of people quickly.
Mr Sunak said he had considered an alternative of a targeted council tax rebate but it was felt this could see people who live in high-value homes but who still need financial support losing out.
He said if wealthy people can do without the Government handout then they should give it to charity - something he said he will be doing.
He told Sky News: “So actually this being universal means that we avoid all of those problems and really do get help to everyone who needs it and you, like me, I am sure like me, you can also give that money to charity if you don’t need it.”
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The Resolution Foundation think tank has examined the impact of Rishi Sunak's latest cost of living package and worked out what it will mean for family finances.
In a new report published this morning it said the Government's total package of measures (those announced in March combined with those announced yesterday) will "in effect offset 82 per cent of the rise in households’ energy costs in 2022-23, rising to over 90 per cent for poorer households".
When Rishi Sunak announced the Government's new cost of living support package yesterday he also said that "benefits will be uprated by this September’s CPI which, on current forecasts, is likely to be significantly higher than the forecast inflation rate for next year". Meanwhile, the triple lock "will apply for the state pension".
Promising to uprate benefits next April by the rate of inflation this September (as normal) looks like it will be a very expensive commitment.
The Resolution Foundation has now put a price on it: About ￡15 billion.
In a report published this morning, the think tank said: "Importantly, the Chancellor confirmed that the Government intends to keep to the usual rules for uprating benefits in April 2023, increasing them by September’s value of inflation, and returning to the triple lock for uprating the state pension. On current forecasts, this means that most benefits and the state pension are set for an increase of around 9.5 per cent, the largest nominal increase since 1991, and at an expected cost of around ￡15 billion."
Chris Bryant, the Labour chairman of the Privileges Committee, has just set out the rough timetable for the committee to start its investigation into whether Boris Johnson misled Parliament over partygate.
He tweeted: "I have summoned a meeting of the Commons Privileges Committee for Tuesday 7 June to dispose of its outstanding business, namely a report on the powers of select committees, to follow up our earlier (May 2021) report on which we have been consulting.
"That done, a motion to replace me on the Committee with another Labour MP will go before the House, then the Committee will meet again to elect a new chair and start its inquiry into the conduct of the Prime Minister, in which I will take no part as I have recused myself."
Rachel Reeves, the shadow chancellor, said there are flaws in the Government's cost of living plan as she pointed to the fact that people with a second home will now receive two separate ￡400 energy bill grants.
She said: “It is not right that if you own a second or a third home you should get this ￡400 payment multiple times. You can now get a situation where somebody who’s incredibly wealthy gets ￡400 on three or four occasions because they own so many properties.
“This is only happening because this package has been rushed through because the Government has been resisting this.”
Rishi Sunak said this morning that second homes will only account for a small proportion of the payments.
Rachel Reeves, Labour's shadow chancellor, said it was "blindingly obvious" the Government should have imposed a windfall tax on oil an gas companies months ago.
She told the BBC Breakfast programme: “It is clear that Labour are winning the battle of ideas. But I too have to ask what on earth took them so long? When it was blindingly obvious to everybody else that this was absolutely necessary.
“I think the big question that still needs to be answered is how are we going to stop ourselves from being in exactly the same position this time next year?"
Rishi Sunak has insisted he is not thinking about resigning as Chancellor.
He said: “No. I am fully committed to helping get the country through what are some challenging months ahead and build a brighter future for the people I am very privileged to represent.”
Spiking inflation and slowing economic growth have sparked fears that the UK could become trapped in a period of stagflation (soaring inflation and little to no growth).
Rishi Sunak said he does not "share that pessimism" and he is "very confident about the outlook for our economy over time".
He told the BBC: "The first thing that gives me confidence about that is the unbelievable resilience that we have seen over the past couple of years during the pandemic from our workers, from our businesses, from our entrepreneurs.”
Rishi Sunak has insisted that "first and foremost" he is a "pragmatist" as he defended his approach to running the economy.
He told the BBC Radio 4 Today programme: “I am a fiscal Conservative… I believe it is incredibly important that I manage the country’s finances responsibly and that means after having suffered the shock that we did to get our borrowing and debt levels back on a sustainable trajectory.
“But that is not some theoretical construct, that’s because it is good for our kids. It is right that we don’t pass the burden onto them.”
Labour declared victory after the Government U-turned yesterday and announced it is imposing a windfall tax on the excess profits of oil and gas giants.
But Rishi Sunak today insisted that he is not implementing Labour policy or adopting Labour's approach to the economy.
He told BBC Radio 4's Today programme: “No actually, I don’t think that is fair. The Labour policy was not well thought through. Our policy is to get the right balance between taxing what are extraordinary profits from energy companies… I think that is reasonable… but actually we also care about incentivising business investment and that is something that the Labour Party doesn’t care about.”
Rishi Sunak insisted yesterday that much of the support he was announcing was a "one-off".
He was asked this morning if he will be willing to offer further support to families next year if the cost of living situation does not improve.
In a hint that he will be prepared to act he told the BBC: “People can judge me by how I have acted over the last couple of years. I have always been prepared to respond to the situation on the ground, what is happening to the economy, what families are experiencing and make sure that we have policies in place to support them through that. That is the first thing I’d say.
“In terms of is it one-off, what is happening next year, I would go back to what I said earlier, I do want people to be reassured and confident that we will get through this, we will be able to combat and reduce inflation, we have the tools at our disposal and over time it will come down.
“Actually if you think about next year, for those who are most vulnerable, pensioners and those on benefits, what they are likely to experience is a very significant increase in those benefits and pensions as a result of the high inflation this year.”
Rishi Sunak has repeated his call for wealthy people to donate a ￡400 energy bills grant to charity if they do not need it.
The Chancellor told ITV’s Good Morning Britain: “I’m sure you will join me in giving that money to charity.”
Rishi Sunak has given his "full support" to Boris Johnson to continue as Prime Minister in the wake of the publication of the Sue Gray report into partygate.
The Chancellor said: "These matters have all been now fully looked at by both Sue Gray independently and also by the police.
“They have reached all their conclusions, the Prime Minister has apologised and made a statement and importantly now made changes in how Downing Street runs.
“I do think that is the right approach and he has my full support in carrying on now and delivering for the British people.”
When Rishi Sunak unveiled his initial cost of living support package at the Spring Statement in March, MPs on both sides of the House of Commons said it would not be enough and urged the Chancellor to go further.
Mr Sunak was asked this morning why he had waited until the end of May to set out additional help and he said: “It was right to wait until we had some more certainty about what would happen to energy bills in the autumn.
“They are the biggest driver of the increase in the cost of living and it wasn’t until this week we heard from Ofgem who are the regulator that sets those prices that we now have a bit of clarity about that and that meant I could size the support appropriately.”
Told that the Office for Budget Responsibility had warned in March that the energy price cap could surge in the autumn, Mr Sunak said: "The key thing is ‘could’. The Office for Budget responsibility is not the independent regulator that set the energy price cap… the reality is the price cap is set over a period from February through to the summer so it simply isn’t the case that anyone had any good idea about what it was at the beginning of that period.”
Rishi Sunak yesterday declined to use the term "windfall tax" when he announced the Government's U-turn on the policy. The Treasury has labelled it a "energy profits levy" instead.
This is likely because Labour long-called for the tax to be brought forward and every time a minister says the words could be claimed as a victory by the Opposition.
Mr Sunak continued to refuse to use the term this morning. Asked why he did not announce the windfall tax at the Spring Statement in March, the Chancellor said: “Well, on the levy that we are putting on energy companies, as I said we wanted to take the time to get that right so we could also incentivise investment.
“That is a very different feature of how we are doing it, it is an important one and I think it was important to take the time to get that right.”
Before yesterday's announcement of a new windfall tax on oil and gas giants, the Government had long opposed the policy.
Asked why he had performed a U-turn, Rishi Sunak told Sky News: “Well, I have always approached this as a pragmatist. My view is we wanted to find a way that we could tax these profits fairly, which I think is the right thing to do given the circumstances of a war leading to very high prices which are leading to excessive profits.
“But I wanted to do that in a way which would continue to incentivise investment and that is why we have taken the time to get this right and our version of this contains a very generous incentive for businesses to continue investing so that the more investment they make, the less tax they pay.”
The Government's decision to spend billions of pounds more on helping people through the cost-of-living crisis has sparked concerns about what impact the extra spending could have on the already spiking level of inflation.
Rishi Sunak was asked during an interview on Sky News what effect the Treasury believes the new ￡15 billion package will have on inflation and he said: "That will be a matter for the Office for Budget Responsibility when they do their formal independent review and analysis of things. Our estimate and my view is that it will have a minimal impact on inflation.”
Asked what "minimal" could mean and if it could be an increase of one percentage point, Mr Sunak said: "No. Much, much less than that. Minimal. The reason for that is twofold. One is that because what we are doing is very targeted at those most in need and secondly because we are also raising money to help pay for it.
“The combination of those two things is the responsible approach because even though we are supporting the economy we want to make sure that we don’t make the inflation situation worse.”
Rishi Sunak, the Chancellor, said that if wealthy households do not need the Government's ￡400 energy bill grant they should donate it to charity - and that is what he will be doing.
Mr Sunak was asked by Sky News presenter Niall Paterson why he will be receiving the money when he doesn't actually need it.
The Chancellor said: "Because, when you are trying to help people on that scale when you need to get help to tens of millions of people, actually you have got a choice, how best can you deliver that and the reality is when you are talking about that number of people there really aren’t many ways to do it and we wanted to make sure that this was as universal as possible.
“We had another alternative of doing that which was a council tax rebate which is where you can try and exclude people right at the top in very large houses.
“But you know what, we tried that, and we tried to do it with a discretionary fund and it has worked reasonably well but there are lots of cases of people who will say ‘hang on, I happen to live in this expensive looking house or in a high council tax band house but I need help too’.
“So actually this being universal means that we avoid all of those problems and really do get help to everyone who needs it and you, like me, I am sure like me, you can also give that money to charity if you don’t need it.”
The Government is giving a ￡400 energy bills grant to every household in the UK but there have been questions asked over why the payment has not been means-tested on the grounds that some wealthier families may not actually need extra taxpayer-funded support.
Rishi Sunak was told that as somebody who was recently named on the Sunday Times Rich List he does not need the money but will still be receiving it.
Mr Sunak told Sky News: “If you look at the overall package that we announced yesterday, three quarters of the funding is going to the most vulnerable households and pensioners.
“You and I don’t need it but actually lots and lots and lots of people do.”
Good morning and welcome to today's politics live blog.
Rishi Sunak is on the media round for the Government as he faces a grilling over his latest cost of living support package.
His decision to impose a windfall tax on oil and gas giants has sparked some Tory disquiet while the Chancellor has also faced some criticism over the universal nature of some of the support he has pledged.
It promises to be a busy day in Westminster and I will guide you through the key developments.
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