Treasury considers £10 billion cost-of-living package for later this week
A £10 billion package of help with fuel bills and the cost of living targeted at those on lowest incomes could be announced as soon as Thursday, I am told.
No final decisions have been made, but the prime minister wants to reset his administration before the Queen’s Jubilee parliamentary recess and after the publication tomorrow of Sue Gray’s report into Downing Street parties - which is expected to be damaging to the PM’s reputation.
The expected acceleration of new Treasury support for the poorest follows today’s announcement by the energy regulator Ofgem that energy bills are likely to rise a further £800 in the autumn to around £2,800 per household on average.
This rise would mean that in England alone, just under 10 million households would suffer from “fuel stress” - they would be shelling out 10% or more of all their net income on energy - according to new research by the Resolution Foundation.
This would be a near doubling of those struggling to heat their homes, or 40% of all English households.
If the Treasury makes a one-off payment of £1,000 to the poorest 10 million households, either through the benefits system or via the warm homes discount, this would cost circa £10 billion.
Alternatively the Treasury could bring forward some of next year’s uprating of benefits, again at a cost of £10 billion - though I understand the chancellor is less keen on providing support via that kind of smoothing of inflation-linked benefit rises.
Some of this £10 billion cost could come from a windfall tax on the surplus profits of oil and gas producers.
I understand the Treasury has ruled out broadening the windfall tax to the surplus profits of those generating electricity from wind farms or nuclear plants.