Local MP, Dame Caroline Dinenage, has welcomed the Chancellor of the Exchequer, Rt Hon Rishi Sunak MP’s, announcement of a further £15 billion in cost of living support for families. This builds on the existing package of support worth £22 billion and further helps guide families through global living pressures.
External inflationary pressures such as the war in Ukraine and supply chain disruptions due to Covid-19 have pushed up prices and have contributed to the energy price cap.
Last week, inflation reached a 40-year high. The price cap increased by more than 50% earlier this year, and is set to increase by a further £800 – with Ofgem warning that the energy price cap is expected to increase to £2,800 per annum by the end of the year.
To combat rising inflation a multifaceted approach is needed including, strong independent monetary policy, responsible fiscal policy and finally adopting an activist approach to supply side reforms. The Government is using all three of these to combat inflationary pressures and reduce it over time.
Caroline welcomes the extra £15 billion in support that the Chancellor has announced. This includes:
- The £200 Energy Bill Rebate loan announced earlier in the year will not have to be repaid and this will be doubled to £400.
- Energy Profits Levy of 25% on oil and gas companies. The Levy will be temporary, and once oil and gas prices return to normal levels it will be phased out. Built into the new levy will be a new investment allowance. That means companies will have a new incentive to reinvest their profits.
- £650 one-off payment for 8 million people in the lowest income households who are on means-tested benefits.
- £300 one-off payment for 8 million pensioners who are in receipt of Winter Fuel Payment.
- £150 one-off payment for 6 million disabled people who use energy intensive equipment.
- £500 million extra will be provided for the existing Household Support Fund from October.
One-third of households will receive help worth a total of £9 billion. In total, families will be supported by funding worth 1.5% of GDP. The Department for Work and Pensions will handle these payments and individuals will receive these payments directly into their bank accounts.
Commenting Caroline said:
“Despite the £22 billion in support that has already been announced, many of my constituents are worried about the pressures that lie ahead. We know the Government can’t protect households from the full impact of the global economic pressures, however this timely announcement will provide much needed reassurance.
This package equates to £1,200 in support for those on the lowest incomes – around one-third of all households.”
Delivering the package of support, Chancellor Rishi Sunak said:
“We know that people are facing challenges with the cost of living and that is why today I’m stepping in with further support to help with rising energy bills.
We have a collective responsibility to help those who are paying the highest price for the high inflation we face. That is why I’m targeting this significant support to millions of the most vulnerable people in our society. I said we would stand by people and that is what this support does today.
It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this. That is why I’m introducing a temporary Energy Profits Levy to help pay for this unprecedented support in a way that promotes investment.”
This support is in addition to assistance with the cost of living that was announced earlier this year including:
- Fuel Duty cut by 5% - this is the biggest cut to fuel duty rates ever and worth over £5 billion. This will be in place until March 2023.
- VAT Relief - homeowners having materials like heat pumps, solar panels or insulation installed with pay 0% VAT as opposed to the standard 5%, this will save families up to £8,000 on installation and up to £300 per year on their energy bills. Wind and Water turbines were also zero rated – reversing the EU’s decision.
- Doubling the Household Support Fund to £1bn, distributed via Local Authorities, supporting the country’s most vulnerable households.
- £330 tax cut – from July people will be able to earn £12,570 a year without paying any Income Tax or National Insurance.
- Employment Allowance increasing to £5,000, a tax cut worth up to £1,000 for half a million small businesses.
