Rishi Sunak will press the button on controversial contingency tax on energy companies on Thursday as he lies out pain relief measures of rising household accounts.
The chancellor confirmed that he would announce a fresh support for people struggling with in cost of life crisis. Measures are expected help poorest households as runaway inflation pushes up in price of everything from food to fuel.
Sunak is expected to announce an increase in warm home discount system that worth from £150 to 3 million low-income households. This figure may rise up to £500.
government could also bring forward planned increase in benefits that were expected next year. sunak could also choose directly finance discount on electricity bills or offer a discount on council tax.
The measures will be funded in part of the contingency tax on energy firms, after a fierce battle inside government over in a policy which was sharply opposed by some cabinet ministers, including business secretary, Kwasi Kwarteng. measure can be extended to all electricity producers and may include exemptions for investments.
BUT senior party official acknowledged decision It was caused splits in in government. “The arguments have been carefully checked both in the Ministry of Finance and in government and there’s high pressure to do sure what a win worth pain and that it does not jeopardize investment,” they said.
“We are not want introduce random taxes that are environment unpredictable for global companies that can go anywhere. We have to set bar high and do something really impressive and put in mass guarantees ensure we do not jeopardize investments.”
reversal on contingency tax will be treated as win for The Labor Organization of Keir Starmer, long known as for such a measure. Tori official said he would draw clear dividing line.
“For conservatives, raising taxes is a means to an end. of financing public services and assistance to those who Can not help themselves. So the focus of Any package will on what does it allow us do to help people who suffering,” they said.
“It will be fresh package which will have an explanation of where additional funds will be obtained… It will be really effective and comprehensive.”
Oil and gas producers benefit from rapid growth global energy prices during the Russian war in Ukraine. Rising gas prices pushed up wholesale electricity market prices including for some manufacturers of renewable and nuclear power.
It is reported that the Treasury has analyzed whether the tax is should be expanded beyond the North Sea operators such as BP and Shell for generators including renewables operators such as wind farms.
The plan is supposed to be taxable more over £10 billion of windfall profits, though City analysts say the figure is well above their estimates. Work plan for a one-off the levy, applied only to North Sea oil and gas producers, would bring in about £2bn.
A spokesman for the Ministry of Finance said: “We understand that people are struggling with rising prices, which is why we provided £22bn of support meet. The chancellor was clear that as the situation develops, so will our response, with the most vulnerable is his number one a priority”.
Economists talk about the cost of living for The number of the poorest households in the UK is expected to increase by almost twice in rate like those for richest when energy bills rise this autumn.
Institute for Fiscal Research (IFS) said the new surge in pending gas and electricity bills in October may lead to average annual inflation rates of up to 14% for the poorest 10 of households.
The energy crisis was thrown in the spotlight this week when Jonathan Brearley, chief executive of energy regulator Ofgem indicated that the energy price the cap will increase by another £830 to nearly £2,800. in October.
The increase is likely hit poorer families disproportionately because more share of them total expenses are coming on energy. IFS said the poorest 10th of households usually spend almost three times so many of their budgets on gas and electricity as the richest 10th.
It means low income homes experience a lot higher rate of inflation than the rich. IFS predicts that although inflation for those on this fall the bread line will reach 14%, the richest 10th can see the rates of about 8%. In all households, inflation is likely to reach 10%. highest rate since 1982.
AT sign of growing pressure on households, figures on Wednesday showed average gasoline prices hit a new record high of 170.4 Pa l, up from 129r per liter year ago. Diesel rose to 181.4 pence, up from 131.3 years year previously.
