Cabinet backlash at £21bn cost-of-living bailout: Tories split over Rishi ‘Gordon Brown’ Sunak’s ‘inflation-stoking’ splurge as economists warn he’ll need to do it AGAIN next year – as defiant Chancellor hints at EXTENDING windfall tax to electricity firms
The Chancellor insisted handing out hundreds of pounds for every household was a ‘balanced’ response to soaring energy bills – and would have ‘minimal’ effect on 恐ろしい瞬間BAジェットはストームコリーで90mphの風によってほとんどひっくり返され、ヒースローへの着陸に失敗したときにその尾が滑走路に衝突しました which is already forecast to top 10 パーセント.
しかしながら, Conservative backbenchers have voiced anger at the way he handed ‘red meat to Socialists’ and bowed to Labour by imposing a windfall tax on the surging profits of oil and gas firms to help fund the move.
Business Secretary Kwasi Kwarteng signalled that he is still opposed to the levy, amid fears it will crush investment in UK infrastructure.
And Jacob Rees-Mogg warned that the government borrowing to spend more is ‘deeply inflationary’, and extra taxes are not ‘economically cost free’.
Economists inflamed Tory splits by saying ‘Gordon Brown would have been proud’ of the way Mr Sunak redistributed money from the rich to the worst-off in his policies.
They also cautioned that he will be under huge pressure to renew the supposedly one-off bailout next year, as energy prices are still expected to be at eye-watering levels.
In a round of interviews after what amounted to a mini-Budget yesterday, Mr Sunak argued that he was still a ‘fiscal Conservative’. ‘Our estimate, and my view, is it will have a minimal impact on inflation,’ he said of the bailout.
Asked if the effect could be as high as 1 percentage point, he replied ‘no, much, much less than that, minimal’.
He argued that was the case because the help is ‘very targeted’ at those who need it most while money is being raised to pay for the measures.
Amid the fallout from his announcement yesterday, スナック氏:
- Confirmed that he will donate his own potential £1,200 benefit from the energy bill handouts to charity, and urged people who do not need the money to follow suit;
- Hinted he could bring in billions of pounds more by extending the windfall tax to ‘extraordinary’ electricity firm profits;
- Refused to rule out returning next year with another emergency package to ease the pain from soaring energy bills;
- Carefully dodged using the term ‘windfall tax’ after Labour accused him of bowing to their calls, instead saying he was introducing an ‘energy profits levy’;
Despite warnings of a sting in the tail of higher taxes and borrowing, the Chancellor said every household would get £400 off energy bills. The neediest will pocket as much as £1,500
The massive package of help for struggling families was unveiled after watchdogs warned that the ウクライナ crisis means energy costs are set to soar again this Autumn – by more than 40 パーセント.
The government performed an extraordinary U-turn on imposing a 25 per cent windfall tax on the surging profits of oil and gas firms, following weeks of wrangling in Cabinet.
But Mr Sunak attempted to soothe Conservative fury by saying the levy – which should raise £5billion in the first year – will be ‘temporary’ and there will be big tax breaks for companies that invest.
The £200 per household state loan for energy bills – which was due to take effect in October be paid back over the next four years – is being converted to a permanent grant and doubled to £400 to take the edge off the misery of spiking inflation for 28million homes across Britain.
Officials have confirmed that owners of second homes will benefit for each property. Mr Sunak will receive the benefit as he is believed to have multiple properties, although he does not directly pay utility bills in his grace-and-favour residences. It is understood the Chancellor will donate his to good causes in his constituency.
Eight million households on benefits will also get a £650 handout, paid in two stages in July and autumn – which will cost the Treasury £5billion.
It means that most of those families could be due a total of £1,200 over the coming months, including the previously-announced £150 council tax rebate for band A-D properties.
Pensioners who get winter fuel allowance will receive £300 extra, and he confirmed that the triple-lock will be applied to the state pension this year – likely to entail a double-digit increase. People on disabled benefits will get an additional £150.
The maximum that anyone could receive as a result of this package and the Spring Statement earlier in the year is £1,650, according to the Treasury.
The funding for the package is murky, as while the windfall tax will potentially last until 2025 the government has not estimated how much it will raise beyond £5billion in the first year. It will be ‘phased out’ when energy prices return to ‘normal’.
The costings are also open to question, as the universal handouts have been valued at £6billion – but in fact the true figure could be £12billion as previously half of the £400 handout was a loan and due to be recouped in the coming years.
Former minister Robert Halfon called the package an example of ‘compassionate Conservativism’ but fellow Tory MPs urged the Chancellor to cut taxes rather than deliver handouts.
‘The best way to help people is to lower the tax burden,’ said Sir Edward Leigh.
David Davis, a former Brexit minister, warned a windfall tax might cost more than it raised if it drove off investment.
But a defiant Mr Sunak insisted he was making the ‘right decisions’ and taking a ‘balanced’ アプローチ.
He did not rule out returning next year with another emergency package to ease the pain from soaring energy bills.
Mr Sunak told BBC Breakfast: ‘We are sitting here in May, we don’t know what energy bills will be next April. I think people can judge me by my actions over the past couple of years.
‘I’ve always tried to be responsive to the situation that the country and the economy is experiencing, we’ll always act like that.’
The Chancellor suggested wealthy individuals who do not need the £400 energy bills grant can ‘join me’ in donating the sum to charity.
He told ITV’s Good Morning Britain: ‘I’m sure you will join me in giving that money to charity.’
Justifying the way the support was being delivered to all households rather than just the poorest, Mr Sunak said there are only a couple of ‘practical’ ways of delivering payments, either universally or through the council tax system, which could exclude some deserving individuals.
He told BBC Breakfast: ‘Second homes account for one or two per cent of the property stock.’
Mr Sunak suggested that sharp inflation-linked increases in pensions and benefits make next year make it less likely he will need to bring in another bailout.
But he told BBC Radio 4’s Today programme: ‘People can judge me by how I’ve acted over the last couple of years.
‘I’ve always been prepared to respond to the situation on the ground, what’s happening to the economy, what families are experiencing and making sure we’ve got policies in place to support them through that.
‘In terms of ‘is it one-off?’, what’s happening next year, I’d go back to what I said earlier. I do want people to be reassured and confident that we will get through this. We will be able to combat and reduce inflation, we have the tools at our disposal and after time it will come down.’
彼が追加した: ‘First and foremost I’m a fiscal conservative, I believe it’s incredibly important that I manage the country’s finances responsibly. That means after suffering the shock we did to get our borrowing and debt levels back on a sustainable trajectory.’
しかしながら, Mr Rees-Mogg delivered a shot across the Chancellor’s bows by telling Sky News that businesses were not a ‘honeypot’ he could raid for cash.
‘It’s a very difficult balancing act in an inflationary period,’ 彼は言った. ‘You have to get the balance right to ensure that the deficit doesn’t explode, because deficit spending during an inflationary period is deeply inflationary.’
‘And as I say, I think this is a balancing act, that it would be foolish for me to pretend it’s easy to get right.’
‘What I was saying there is that people need to understand that there is not a tax that you can take that is economically cost free.
‘It doesn’t matter which tax it is, it will have an economic consequence.
‘Whether it’s a pasty tax, or it’s an excess profits tax, there is an economic consequence, there isn’t a honeypot of free tax that governments can just pop into.
‘So as long as they raise the tax, knowing that it will have an economic consequence, which the chancellor does, then it is a matter of choosing between one form of revenue-raising and another.
‘There is no non-tax way, 最終的に, of spending. It is either today’s tax, or it’s tomorrow’s tax through borrowing.’
Rishi Sunak said he is following in the footsteps of previous Conservative governments – including Margaret Thatcher’s – by imposing a windfall tax
Levy puts BP’s £18bn investment plan in doubt
BP may rethink investment plans following news of the windfall tax on energy firms, the company suggested last night.
The threat throws into doubt its promise this month to invest up to £18billion in Britain by the end of 2030.
Rishi Sunak’s 25 per cent levy tax on oil and gas firms was expected to be a one-off, but he said it would remain until 2025.
BP said: ‘We know just how difficult things are for people across the UK and recognise the Government’s need to take action.’
But it added: ‘Today’s announcement is not for a one-off tax – it is a multi-year proposal. Naturally we will now need to look at the impact of both the new levy and the tax relief on our North Sea investment plans.’
Offshore Energies UK (OEUK), a trade body for the British offshore energy industry, said the tax was ‘a backward step’ and warned it would ‘discourage UK offshore energy investments’ and increase the country’s reliance on oil and gas imports.
Chief executive Deirdre Michie added: ‘This is a disappointing and worrying development for industry, the shockwaves of which will be felt in offshore energy jobs and communities, and by consumers, for years.’ Rain Newton-Smith, chief economist at the Confederation of British Industry, 前記: ‘It sends the wrong signal to the whole sector at the wrong time against a backdrop of rising business taxation elsewhere.’
Derek Leith, oil and gas tax expert at accountant EY, said it was ‘worse than many may have anticipated’. Mark Littlewood, director general of the Institute of Economic Affairs think-tank, said is was ‘a policy victory for Labour’, adding that the Tories’ default setting was now ‘to respond to virtually any problem by increasing taxes’.
Boris Johnson has warned that providing more support risked an ‘inflationary spiral’ by pumping more cash into the economy.
Some Tory MPs called for tax cuts, and questioned the decision to borrow billions of pounds to give away at a time of soaring inflation.
South Dorset MP Richard Drax accused the Chancellor of ‘throwing red meat to socialists by raising taxes on businesses and telling them where to invest their money’.
Former leader Sir Iain Duncan Smith described the package as a ‘good start’ but said the Chancellor should also start to address the ‘burden of taxation’ which stands at a record level.
Mr Sunak said he would normally agree that cutting tax was the best approach but added that ‘given the types of people we are trying to help, I believe that direct cash transfers are the right way, rather than going through the tax system’.
The Chancellor’s decision to impose a windfall tax came despite opposition from senior figures in Downing Street and a string of Cabinet ministers including Business Secretary Kwasi Kwarteng and Health Secretary Sajid Javid.
The policy has been championed by Labour for months.
But Mr Sunak rebranded his proposals as an ‘energy profits levy’ – and said his £5billion scheme was much better designed than Labour’s £2billion proposal.
The new tax will hit firms including BP and Shell, which have enjoyed massive profits on the back of soaring oil and gas prices.
It will levy a 25 per cent surcharge on profits from the North Sea, taking the total tax rate there to 65 パーセント. It is due to stay in place until the end of 2025 unless oil and gas prices return to ‘historically more normal levels’.
Labour Shadow Chancellor Rachel Reeves said Mr Sunak had been dragged ‘kicking and screaming’ into a U-turn.
But Mr Sunak said the ‘pragmatic’ decision was justified by the ‘extraordinary’ profits the energy giants were making as a result of the impact of the war in Ukraine on global energy process.
‘Being able to change course is not a weakness, it’s a strength,’ he told MPs in the Commons.
The Chancellor defended the decision to target most help to those on low incomes, saying that the Government had to ‘make sure that those for whom the struggle is too hard, and for whom the risks are too great, are supported’.
ポールジョンソン, director of the Institute for Fiscal Studies, said the package announced by Mr Sunak meant that ‘on average the poorest households will now be approximately compensated for the rising cost of living this year’.
The CBI acknowledged the need to help families through ‘one of the worst cost of living crunches in recent memory’, but warned that the windfall tax sent ‘the wrong signal to the whole sector at the wrong time against a backdrop of rising business taxation elsewhere’.