Rishi Sunak has warned that he can’t fully protect struggling households from huge increases in bills, and defended his £21bn package of support, which handed hundreds of millions of pounds to second home owners and wealthy pensioners.
The chancellor also denied that he was pressured by Boris Johnson to announce help for those hit by the cost of living crisis as a way of distracting from Sue Gray’s report into partying and rule-breaking in Downing Street.
Mr Sunak was grilled by the Treasury select committee on Monday, just hours before the prime minister faced a confidence vote that could end his time in office.
He was questioned on the fairness of the new cost of living support measures after research showed that wealthy pensioners were among those who would see the biggest benefits.
Labour’s Siobhan McDonagh asked how it could be right that people with more than one property would receive multiple £400 discounts.
Mr Sunak said that this was an unavoidable consequence of making some of the support on offer universal, rather than targeted.
A number of campaign groups had urged the chancellor to ensure that any help was focused on those most in need, in order to get best value for money and to lessen the probability of further fuelling inflation.
The chancellor also told MPs that the prime minister had not asked him to make the spending announcement on the day after the publication of a damning report by senior civil servant Sue Gray into a number of lockdown-busting parties in No 10.
He said that the timing of the announcement on financial support last month was a result of the Treasury having to wait until it had enough data on expected energy price increases this autumn.
The chancellor said: “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.”
Mr Sunak had pushed back for weeks against suggestions from the opposition benches and economists that he needed to step in immediately to offer help with rising bills.
The chancellor said last month that it would be “silly” to announce support in the summer, before changing his mind.
The timing of the change of heart prompted speculation that it was motivated by a desire to move public attention away from anger about the string of boozy events held in Downing Street during lockdown.
Mr Sunak also told the Treasury committee on Monday that he could not fully protect people against sharp rises in the cost of essential goods.
There could be a further £800 hike in the cost of heating and power for an average home when Ofgem’s price cap is reviewed in October, taking bills to around £2,800 a year.
High energy costs have helped to push inflation to a 40-year high of 9 per cent, with further rises expected later in the year.
Mr Sunak stressed that the support measures introduced last month were “temporary”, and shrugged off suggestions that he had left the door open for further measures.
He told the 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.”