First Minister Mark Drakeford: UK Government's cost of living package 'barely scratches the surface'

Report from Cost of Living Correspondent, Carole Green.

The Welsh Government has said the UK Government's latest measures to support people through the cost of living crisis "barely scratch the surface".

First Minister Mark Drakeford made the comments after Rishi Sunak, the UK Government Chancellor, announced fresh measures on Thursday (May 26) to help families and households with the soaring cost of living.

Mr Sunak announced a range of measures designed to help those on lower incomes, including a one-off £650 cost of living payment for vulnerable households across Wales.

He also said that a £200 payment to help with energy bills, scheduled for October, is to be doubled and turned into a grant - meaning it is no longer repayable.

Chancellor Rishi Sunak said the introduction of an Energy Profit Levy was designed in such a way that it would not deter investment Credit: Parliament

In something of a U-turn, Mr Sunak also announced the introduction of a temporary Energy Profits Levy - in other words a so-called windfall tax - on oil and gas firms, which he said would raise £5bn over the next year to help fund the support measures outlined.

However, Mr Drakeford said he felt the latest package goes nowhere near far enough to help those struggling with spiralling inflation and surging energy costs.

He said: "After defending the huge profits of oil and gas companies for so long, the UK Government has finally acted on calls for a windfall tax.

"This has taken months - months where people across the country have been worried about the rising cost of living and making ends meet.

"Whilst this U-turn and increased support for those on lower incomes is welcome, the measures announced today barely scratch the surface.

"We will continue to do all we can to protect people in Wales from the cost of living crisis, and to push the UK Government to do more."

  • Analysis from Cost of Living Correspondent, Carole Green

The Chancellor’s announcement of extra support to help ease the Cost of Living crisis will be welcome news in the hundreds of thousands of households up and down Wales struggling to pay their rising bills tonight.The £15 billion pound intervention of universal and targeted support comes as the prospect of even higher inflation and rising energy prices in the Autumn looms large. It signals the Chancellor is prepared to act and not just to listen. It was Rishi Sunak’s  second chance to get it right after his Spring Statement was widely criticised even within his own party for being thin on help and poorly targeted. 

The Westminster Government will hope today’s additional support shows it does “get it” - a message particularly important in its 2019 former Red Wall seats. However, those claiming benefits in Wales are disappointed the benefit rates were not uplifted towards inflation, currently running at 9% - and even higher for those living on a low income. These households spend a higher proportion of their income on essentials like food and energy. 

  • What help was announced for struggling families in Wales?

The Chancellor said "the most vulnerable households across Wales" will receive a one-off £650 cost of living payment.

Meanwhile, the planned discount on energy bills in October - which had effectively been a loan that would be paid back over five years - has been doubled to £400. It has also now become a grant, meaning it will not have to be paid back.

Pensioners are to receive a separate one-off payment of £300. While people in receipt of disability benefits are to receive a one-off payment of £150.

Mr Sunak also announced an increase of £500 million to the Household Support Fund. This system only operates in England although as a result of the increased funding, Wales will receive money for its own support schemes through Barnett funding.

The Chancellor said: "Our package of support will help the lowest income households in Wales by over £1,000 directly from the UK Government, which I hope will calm the anxiety that I know many have been feeling about the rising cost of living.  

"This significant support is mostly targeted at those on low incomes, pensioners and disabled people – the most vulnerable in society who we have a responsibility to support.

"Recognising the unprecedented rise in energy bills in the Autumn, all households in Wales will get £400 off their energy bills from October, with no requirement to repay the money.

"Of course, to manage public finances responsibly we need to raise funds to help pay for these measures, so we are introducing a temporary, targeted levy on the extraordinary windfall profits the oil and gas sector is currently making from exceptionally high oil and gas prices."

Oil and gas firms will receive tax relief if they invest in their UK operations Credit: PA Images

Meanwhile in the Senedd on Thursday, leading figures from a range of organisations seeking to tackle the cost of living crisis gave their accounts of the impact it is having on Welsh society.

Members of the Bevan Foundation, Citizens Cymru and the Wales TUC were amongst those giving evidence to the Economy, Trade and Rural Affairs Committee.

Shavanah Taj, general secretary of the Wales TUC, said she had heard stories of people resorting to gambling in an effort to pay off their energy bills.

She said: "We have genuine concerns about the debt that is rising.

"We've actually been talking about the harms of gambling and over the last couple of days we've actually been hearing from people who were saying that they are dealing with personal cases, from their members, who have begun gambling as a means to try and pay off a gas or electric bill."

Energy bills are set to rise again in October, when the energy price cap is predicted to go up to £2,800 - meaning the average annual bill will go up by around £800 a year.

Jonathan Brearley, the chief executive of energy regulator Ofgem, 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.