Yahoo Finance Chancellor: ‘No pressure to release £21bn support a day after Sue Gray report’
The Chancellor has said there was no pressure from the Prime Minister to announce a package of financial support for UK households a day after Boris Johnson came under pressure due to the release of the Sue Gray report.
It comes as the Prime Minister faces a confidence vote among Tory MPs amid discontent over lockdown-busting parties at No 10 Downing Street.
Rishi Sunak told the Treasury Select Committee that he backs the Prime Minister and denied suggestions that his £21 billion package of support to offset soaring inflation and energy prices was used to direct attention away from the fallout over the report.
Committee member and Labour MP Rushanara Ali asked Mr Sunak if he came under political pressure to announce the package in May after he suggested he may wait until the autumn to hand out funds to hard-hit households.
🗣️ Our session with Chancellor @RishiSunak @hmtreasury has now started.
📺 Watch the session in the Tweet above or on Parliament TV 👇https://t.co/GRxj6mnTDK— Treasury Committee (@CommonsTreasury) June 6, 2022
The Chancellor said: “No. The way the price cap works, there is an observation window from February to August, until you are through you don’t know what it will be – while there were estimates, there was no actual data.
“We couldn’t do it for the spring statement because the observation window had barely opened for the price cap, so anything could have the potential to be very wrongly sized.
“I have always said I want to strike the right balance about reassurance to people and waiting for enough information to ensure it is appropriately sized.
“There is no perfect time but we had to do it.”
He also denied that there was pressure from regulator Ofgem and said he felt informed after receiving sufficient weekly estimates over the potential price cap increase later this year.
Consumers are braced for the energy price cap to rise by more than £800 to £2,800 in October as the squeeze on living standards continues.
It comes after UK consumer price index (CPI) inflation struck a 40-year high of 9% in April, and it is expected to soar above 10% by the end of 2022.
Mr Sunak stressed that the support measures introduced last month are “temporary” and shrugged off suggestions he has left the door open for further measures.
He told the Treasury Select Committee: “When I’m asked about further measures I always give the same response – I wouldn’t read anything more or less into it.
“It is that in the last two years I’ve always tried to be responsive to the economic situation as I see it and as it is affecting the country.
“The structure of what we have put in place is by definition temporary and it is a careful and well-constructed package which will minimise the issue of inflation.”
The Chancellor added that Treasury officials have not modelled what impact his cost-of-living support will have on child poverty in the UK.
Mr Sunak also defended the decision not to provide cash support for businesses last month, after coming under fire from trade bodies such as the Confederation of British Industry and Federation for Small Businesses.
He chose to focus on funding for households instead of firms as businesses have passed their inflation onto customers through higher pricing.
“The inflation we are seeing is the result of prices being passed through the chain to consumers,” he told the committee.
“The second thing is, we’ve already provided different types of support for businesses, such as notably the business rates holiday coming through this year, a 50% discount which is worth £1.7 billion.
“Also, the employment allowance tax cut which came in the spring, which will mean that around half a million small businesses will see a £1,000 tax cut on their national insurance bill.”
