What are the possible measures the government could bring in to help ease the cost of living crisis?

Rishi Sunak says he stands ready to help struggling families but it is not clear what is being considered. Credit: PA

By ITV News Westminster Producer Lewis Denison

The cost of living seems to be getting higher and higher for struggling families in the UK, but the reassurance from minister after minister is that the government is considering new ways to help people.

Boris Johnson repeated that claim at Prime Minister's Questions, telling MPs he will "look at all measures" available to alleviate the financial pressure piling on Britons.

And with inflation at a 40-year high of nine percent, Chancellor Rishi Sunak has insisted he stands "ready to take further action".

But just last month he said it would be "silly" to provide people with more help with their household bills - which have risen this year by nearly £700 - until the energy price cap rises again in the autumn.

Mr Johnson reminded MPs at PMQs that the government is "already helping people with the cost of living in any way that we can" however Money Saving Expert Martin Lewis says the £350 of support already set out for people is not enough.

Watch Boris Johnson and Keir Starmer debate the cost of living at PMQs:

Ideas floated by ministers - which include making MOTs mandatory once every two years rather than annually, and increasing group sizes for childcare and so reducing costs - have been criticised as inadequate.

Shadow chancellor Rachel Reeves has branded the government "out of touch" and "out of ideas" in a Commons debate on the cost of living.

So, what solutions are the opposition parties suggesting?

  • Windfall tax

Labour leader Sir Keir Starmer has been pushing for a windfall tax for weeks and he's now claiming a government U-turn on the policy is "inevitable".

The idea of a windfall tax, under what Labour is proposing, would see the oil and gas giants make a one-off contribution to the UK on the huge profits they've made thanks to the soaring cost of energy, which is rising globally due to embargoes on Russian fuel.

Analysis by Labour shows the expected profits of North Sea oil and gas firms in 2022/23 are "higher than the combined rise in energy bills for every household in the UK".

Sir Keir said: "Whilst he [Boris Johnson] dithers, British households are slapped with an extra £53 million on their energy bills every single day. Meanwhile every single day North Sea oil and gas giants rake in £32 million in unexpected profits."

His party has calculated that a windfall tax could provide the government with enough cash to give every household £600 off their bills.

Predicting a change in policy, Sir Keir said: "Doesn't [Boris Johnson] see that every single day he delays his inevitable U-turn, he's going to do it, he's choosing to let people struggle when they don't need to."

  • VAT cut

The Liberal Democrats, which also support a windfall tax, are pushing for an emergency VAT cut.

VAT, or Value Added Tax, is a tax applied to the purchase price of certain goods, services and other products bought and sold in the UK.

The party wants it to be cut from 20% to 17.5%, a move it says would save the average family £600.

Liberal Democrat Leader Sir Ed Davey said: "Families and pensioners on the brink need saving from soaring inflation but this Conservative government is nowhere to be found.

"We need an emergency VAT cut now to slash prices at the till and fuel pump today.

"The warning lights are all flashing red and Boris Johnson hasn't a second to lose."

There are also calls to cut VAT on energy bills, which is currently at 5%, by temporarily removing the tax entirely.

  • Removing green levies on energy bills

Many opposition MPs support green levies on energy bills, which add around £153 per year for the average household, because the cash goes toward helping the UK achieve its net-zero ambitions.

But many backbench Tories want the levies to be scrapped, at least temporarily, with chair of the Commons Education Committee, Robert Halfon, describing the tax as a “millstone around people’s necks”.

Earlier this year, 20 Tories, backbenchers and peers, wrote to the prime minister urging him to scrap the tax, saying the UK had "almost uniquely caused our energy prices, through taxation and environmental levies, to increase faster than those of any other competitive country".

And the think tank Centre for Policy Studies says removing the tax would be "an obvious win for consumers".

  • Increasing Universal Credit

One of the reasons poorer families are struggling so much with the rising cost of living is that inflation, rising to 9%, is three times higher than the 3% increase to benefits added last month.

And rather than facing 9% inflation, families on benefits are experiencing an even higher rate of 11%, according to the Institute for Fiscal Studies, which says the less-well-off are hardest hit "because they spend a large fraction of their budget on energy and food".

The Green Party wants to combat that with a £20 weekly uplift to Universal Credit.

This, according to the Greens, "would mean those in receipt of Universal Credit would receive an extra £1,000 over the course of the year".

A £20 boost to Universal Credit was brought in to help people manage through various coronavirus lockdowns, but it was removed as restrictions were eased last year.

Senior Tory MP Sir Bernard Jenkin said in a Commons debate on Wednesday that the uplift "should immediately be restored".

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What government help is already available?

  • Discount for domestic energy companies

The chancellor said all domestic energy customers will get an upfront discount on their energy bills worth £200 from October in the form of loans.

The government will provide firms with loans to help them afford the discount and households will repay the discount in £40 instalments over five years.

  • Council tax rebates

Rebates of £150 are being provided to households in council tax bands A to D, with no need for the cash to be repaid.

Around 80% of all homes in England will benefit from the rebate, the Treasury says.

  • Help from local authorities to increase

Councils have also been given a fund of nearly £150 million to support struggling families in living in high council tax rate homes.

Local authorities can use the cash to help lower income households in higher council tax bands, and households in bands A-D who are exempt from council tax.