Sunak makes windfall tax U-turn to fund £650 payment to those on benefits

The chancellor unveiled his new cost-of-living solutions. But will they be enough to help those struggling with the cost of living crisis? Political Editor Robert Peston explores

Chancellor Rishi Sunak has performed a dramatic U-turn on a windfall tax in order to raise cash for a new package of support to help with the cost of living.

What support has the chancellor announced?

  • Eight million of the lowest income households - those on Universal Credit, Tax Credits, Pension Credit and legacy benefits - will be receive a one-off payment of £650. It will come in two payments; one in July and another in the autumn

  • Pensioners will get an extra £300 via winter fuel payments

  • There'll be a one-off disability cost-of-living payment of £150 for those in receipt of Personal Independence Payments

  • Mr Sunak also doubled a planned £200 energy support grant coming in the autumn to £400 and cancelled the planned repayments

Deputy Political Editor Anushka Asthana talks about how the windfall tax U-turn could set the tone for the Conservatives election campaign.

Sunak makes windfall tax U-turn

The Chancellor said the government will take additional tax from the oil and gas giants to fund a package of support to help with the soaring cost of living.

He called it a "temporary targeted energy profits levy", apparently in a bid to distance himself from Labour's flagship windfall tax policy which it has been demanding for months.

The chancellor suggested his plan was different from Labour's because it would include a "new investment allowance" to incentivise the reinvestment of profits.

The tax will be temporary and charged at a rate of 25%, but oil and gas companies can claw 90% of it back by investing in the UK energy sector.

As Rishi Sunak announces his new cost of living solutions, ITV News' Sangita Lal speaks to those on the sharp end of the crisis.

He said the changes would allow the UK to raise £5 billion to provide additional support to struggling families, however he said the support package is worth £15.3 billion in total.

The additional £10 billion will be raised through borrowing.

The chancellor said the UK "will get through" the cost-of-living crisis, telling MPs in the House of Commons that the government "will not sit idly by while there is a risk that some in our country are set so far back that they might never recover".

He added: "We will make sure the most vulnerable and least well-off get the support they need at this moment of difficulty."

The chancellor's opposite number, Rachel Reeves, said Labour is winning "the battle of ideas in Britain" as she took credit for the new energy tax.

The shadow chancellor said: "It feels like the Chancellor has finally realised the problems the country are facing. We first called for a windfall tax on oil and gas producers nearly five months ago to help struggling families and pensioners.

"Today, he has announced that policy but he can't dare say the words: it's a policy that dare not speak its name with this chancellor."

Mr Sunak was heckled with shouts of "what took you so long?" and "about time" after he began his statement in the Commons.

ITV News' Joel Hills analyses how the chancellor's announcement will help different levels of earners.

Liberal Democrat leader Sir Ed Davey tweeted: "Sunak's like a thief who steals your car and then wants you to be grateful when he returns the steering wheel.

"The British people won't fall for the Sunak Scam. They need a tax cut now to put food on the table, heat their homes and fill up their cars."

Prices in the UK are rocketing, with annual household bills having risen by around £700, National Insurance is rising by approximately £130 and inflation - which is currently at a 40-year high of 9% - is predicted to reach 10% this year.

Soaring fuel prices are regularly breaking records and the Office for Budget Responsibility is warning the UK could enter a recession this year.

On top of that, households are expected to see a further increase of almost £900 to their energy bills in October."

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Families could face increase of almost £900 to annual energy bills

The energy price cap, which jumped by around £700 in April, is expected to rise again in April, this time by a staggering increase of almost £900.

Ofgem chief executive Jonathan Brearley has told the Business, Energy and Industrial Strategy Committee the regulator is expecting an energy price cap in October "in the region of £2,800", up from the £1,971 it is currently at.

The regulator is warning that a huge 12 million households could fall into fuel poverty when the cap rises, almost double the 6.5 million already in that situation.

And it could get even worse in October than forecast, with Mr Brearly telling the Committee "it's quite possible this [price cap] could go higher", adding: "The volatility in the gas market is huge."