Rishi Sunak has emphatically denied the timing of his £15 billion emergency package to help households battling with the cost of living crisis has anything to do with yesterday’s publication of the Sue Gray report.
The chancellor insisted the timing of today’s (May 26) announcement “is because we now have more clarity about what is going to happen to energy bills in the autumn,” rather than serving as a distraction from Partygate.
During a visit to a B&Q DIY store in Watford, Sunak – who along with the prime minister and Boris Johnson’s wife was fined for breaking lockdown laws – added: “With regard to my situation, I fully respect the decision that the police came to. And I sincerely and deeply apologise for the hurt and anger that caused.”
When Martin Lewis, the ‘money saving expert’, told Sunak the timing of the emergency package – which includes a £400 handout to every household in the UK – had left a “slightly ill taste in the mouth”, the chancellor replied: “I can categorically assure you that had no bearing on the timing for us announcing the support, I can give my absolute assurance on that and my word.”
Labour’s shadow chancellor Rachel Reeves reminded the Commons that her party has been calling for a windfall tax for almost five months. Just last week, Sunak and his fellow Tory MPs voted against a Labour motion for a windfall tax on energy company profits on the grounds that it would be “un-Conservative”.
Making his announcement in the Commons, Sunak today said: “The oil and gas sector is making extraordinary profits, not as the result of recent changes to risk-taking or innovation or efficiency, but as the result of surging global commodity prices driven in part by Russia’s war.”
He added that he is now “sympathetic to the argument to tax those profits fairly”.
Reeves said: “”After five months of being dragged kicking and screaming, the chancellor has finally come to his senses, U-turned, and adopted Labour’s plan for a windfall tax on oil and gas producer profits to lower bills.”
The £15 billion support package for households announced today (May 26) will be part funded by a £5 billion windfall tax on energy companies, although the chancellor could not bring himself to call it a windfall tax and instead named it the “temporary targeted energy profits levy”.
Sunak’s “significant set of interventions” will include a £650 one-off payment for the country’s poorest families and targeted help for pensioners (£300) and disabled people (£150).
The temporary levy – aka windfall tax – on energy companies’ profits will be 25%. However, the chancellor also announced 91% tax relief for firms investing in oil and gas extraction in the UK.
To the dismay of green groups and climate campaigners, the tax relief will not apply to investment in renewable energy. Green party peer Natalie Bennett tweeted: “Unbelievably, #Government have confirmed that oil and gas companies can largely avoid the windfall tax by re-investing their profits. And there will be no tax relief for investment in renewables!”