Rishi Sunak has been accused of costing taxpayers £6bn by dithering over his windfall tax U-turn, after he announced a levy on oil and gas companies to help pay for a £15bn cost of living support package. The announcement also sparked fears that the sudden injection of cash would drive up inflation and interest rates.
And environmentalists accused the chancellor of offering state subsidies for climate change, after he announced new tax breaks to ensure the £5bn levy does not deter investment in North Sea oil and gas extraction.
Mr Sunak finally bowed to months of pressure yesterday to impose a 25 per cent tax on the "extraordinary profits" of energy giants, part-funding assistance worth £1,200 a year for around 8 million of the country's poorest households. The move was welcomed as a "breathing space" for families faced with a choice between heating and eating, as prices for energy and food soar.
But the levy applies only from 26 May, meaning that the Treasury will receive no extra income from the additional earnings resulting from recent price spikes, with BP and Shell reporting combined "super-profits" of £11.5bn in the last quarter of 2021 and the first three months of 2022 alone. The Treasury confirmed that borrowing would be increased to cover the remaining £10bn of the cost of the package.
Mr Sunak's package of help will provide one-off payments of £650 to 8.3 million households in receipt of means-tested benefits, £300 to 8 million pensioner households, and £150 each to 6 million individuals receiving disability benefits. In some cases the total will reach £1,650.
COST OF LIVING: HOW TO GET HELP
This story is from the May 27, 2022 edition of The Independent.
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This story is from the May 27, 2022 edition of The Independent.
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