‘HIGH inflation is causing acute distress to the people of this country,’ Tory Chancellor Rishi Sunak admitted yesterday.
Making a statement to MPs in the House of Commons on the Cost of Living Support, he said: ‘The British people understand no government can solve every problem, particularly the complex and global challenge of inflation.’
Outlining ‘the challenge we face’, Sunak said: ‘This country is now experiencing the highest rate of inflation we have seen for forty years. The Bank of England expects inflation to average around 9% this year.
‘Our exposure to global shocks continues to explain most of the inflation above the 2% target.
‘Supply chain disruption as the world reopened from Covid, combined with Russia’s invasion of Ukraine, and potentially exacerbated by recent lockdowns in China, are all contributing to significant price increases for goods and energy.
‘However, over the course of this year, the situation has evolved and has become more serious. There are areas of particular concern. Even excluding energy and food, core inflation has become broader based and elevated.
‘Of the basket of goods and services we use to measure inflation, a record proportion are seeing above average price increases.
‘Also, we are acutely exposed to the European energy price shock and, like the US, we have a tight labour market.’
Indicating more cuts and privatisation of public services, he stressed that ‘fiscal support should be timely, targeted, and temporary’.
He said that ‘we are taking an activist approach to supply side reforms,’ including ‘moving half a million jobseekers off welfare and into work and doing more to support older people back into the jobs market …
‘And, in the autumn, we will bring forward tax cuts and reforms to encourage businesses to invest more, train more, and innovate more – the path to higher growth.’
Moving on to ‘significant support to the British people’, Sunak announced: ‘The oil and gas sector is making extraordinary profits … we will introduce a temporary, targeted, Energy Profits Levy.
‘But, we have built into the new Levy a new Investment Allowance, similar to the super-deduction that means companies will have a new and significant incentive to reinvest their profits.
‘The new Levy will be charged on profits of oil and gas companies at a rate of 25%. And, crucially, with our new investment allowance, we are nearly doubling the overall investment relief for oil and gas companies.
‘This means that, for every £1 a company invests, they’ll get back 90 per cent in tax relief.’
Our Energy Profits Levy will encourage investment, not deter it. It raises around £5bn revenue over the next year so that we can help families with the cost of living.’
To help with the cost of living, we are going to provide significant, targeted support to millions of the most vulnerable people in our society: those on the lowest incomes, pensioners, and disabled people.
‘So, I can announce today we will send, directly to around eight million of the lowest income households, a one-off Cost of Living Payment of £650.
The DWP will make the payment in two lump sums – the first from July, the second in autumn, with payments from HMRC for those on Tax Credits, following shortly after …’
‘From the autumn, we will send over eight million pensioner households who receive the Winter Fuel Payment – an extra, one-off Pensioner Cost of Living Payment of £300.
‘To help the 6 million people who receive non-means tested disability benefits, we will send them, from September an extra, one-off Disability Cost of Living Payment, worth £150.
‘Many disabled people will also receive the payment of £650 I have already announced, taking their total cost of living payments to £800.
‘And, taken together, our direct cash payments, will help one third of all UK households with the cost of living, support worth over £9bn.’
Shadow Chancellor Rachel Reeves welcomed Sunak’s announcements, boasting: that the Tories were adopting Labour’s policies.
She said: ‘It was Labour who first called for a windfall tax on oil and gas companies nearly five months ago and today he has announced one.’
She added: ‘For months, it has been clear the need to get bills down. What kept them so long? Government dither and delay has cost the country dearly.’
‘On this side of the House, we welcome the fact that the government is finally acting on our calls!’
Her support for the Tories came just one day after PM Johnson was attacked by Labour MPs for his criminal law-breaking parties during the Covid epidemic.
