Sunak’s opening remarks
Rishi Sunak says the government will set out help those for whom the “struggle is too hard and the risks are too great” amid the cost of living crisis. “This government will not sit idly by,” he adds.
The chancellor says the UK is experiencing the highest inflation for 40 years, averaging about 9% this year. Russia’s war in Ukraine and Covid lockdowns in China are having the biggest impact.
Sunak says “we can get inflation under control”, although he admits it may take time. The Bank of England’s independence will help, while the government must not “excessively add fiscal stimulus” to increase inflationary pressures. This means the government’s support must be temporary and targeted. Finally, he says the government must fix supply issues which have added to inflation.
“We will provide significant support to the British people,” he says.
Aubrey Allegretti, political correspondent: Sunak invokes the high level of support he was praised for providing during Covid, saying the government will “do what is right, as we did throughout the pandemic”.
To satisfy concerns from some Tory backbenchers about too high levels of spending only fueling the inflation problem, the chancellor says the financial support being unveiled today will be limited and targeted.
He promises to make sure that those for whom “the struggle is too hard … are supported”.
The chancellor announces a “temporary targeted profits levy” to tax extraordinary profits of energy companies, while still incentivising investment
The levy will raise about £5bn of revenue, helping to fund the government’s energy support package
Sunak says “we should not be ideological about this – we should be pragmatic”, arguing that the government can tax these profits fairly and in a way which does not discourage investment
The levy will be phased out when current high prices fall, with a “sunset clause” written in to the legislation
Aubrey Allegretti, political correspondent: As he faces loud heckles from the Labour benches for bowing to their calls for a windfall tax despite months of opposition to the policy, Rishi Sunak stresses this is a move that has been pursued before by previous governments – including Conservative ones, he adds quickly.
Sunak stresses the oil and gas sector has been making “extraordinary profits” – not from shrewd business decisions, or efficiency but as a result of “surging global commodity prices, driven in part by Russia’s war”.
Again seeking to distance himself from adopting an opposition policy, the chancellor says he is seeking a “sensible middle ground” and stresses people “should not be ideological about this”.
Sunak says the government will target financial support to the poorest households
The government will send directly to about 8m households a one-off “cost of living payment” of £650, direct to people’s bank accounts
The support is worth more than £5bn “to give people certainty that we will stand by them at this challenging time”
The payment will go to households in receipt of welfare benefits
The chancellor says this system is more effective than uprating the value of benefits
Aubrey Allegretti, political correspondent: Given the Conservatives now represent many more seats with higher levels of deprivation, Sunak has been pressured by those areas’ MPs to provide support to their constituents who are in work but low paid, temporarily unemployed, or off work long-term due to sickness or disability.
The chancellor tries to show he understands the immediacy of their struggle, saying that “right now, they face incredibly difficult choices” – and cannot wait for certainty about their household finances until the autumn.
Pensioners and disabled households
The chancellor says 8m pensioner households will receive a “pensioner cost of living payment” of £300
He says 6 million non-means-tested disability benefit recipients will receive a £150 payment
Aubrey Allegretti, political correspondent: This is a particularly important demographic of voter: Sunak will be wary of ensuring pensioners feel just as supported in the run up to next winter.
He stresses they are “disproportionately impacted” by higher energy costs due to being less likely to be able to top up their income through work, and facing higher energy costs from spending more time at home.
Universal support measures
The chancellor says it is the right thing to do to support all families with the cost of living crisis, as well as those at most need
Sunak says the repayment of the £200 repayable loan, due in October, will be turned into a grant. The payment will be doubled to £400 for everyone
The funding is worth £6bn, he says, adding: “We are on the side of hard-working families”
Aubrey Allegretti, political correspondent: Rounding up his specific, targeted announcements, Sunak still has to demonstrate that the cost of living crisis is being faced by a large section of the population – not just a few million people.
So he recaps the financial support announced so far, but concedes that “we recognise the risk that with any policy there may be small numbers of people who will fall between the cracks.”
Total support package
The chancellor says the total cost of living support is worth £15bn to help families with rising costs, while supporting the most vulnerable in society
This is on top of £22bn announced in the spring
Across all the support, almost all of the 8m most vulnerable households will in total receive at least £1,200 in support
Sunak concludes by saying, for the poorest in society, “they will feel some of the burden eased, some of the pressures lifted. They will know this government is standing by them”
Aubrey Allegretti, political correspondent: Sunak has faced mounting pressure to make a big intervention, not least after Ofgem declared this week that the household energy price cap will rise by just under £1,200.
Hoping that this will be the key argument to convincing critics on his own benches and the opposition ones, he says that is the “same amount” the policies he has unveiled today will provide for “the most vulnerable people”.
Although the Commons has been slightly emptier given recess is just around the corner, he gets some supportive cheers from fellow MPs – including Boris Johnson, who gives the chancellor a pat on the back as he sits down.