Sunak races to finalise cost of living response after energy bills warning
Rishi Sunak is scrambling to finalise a package of measures that could be announced as soon as Thursday aimed at alleviating the cost of living crisis, after the energy regulator said annual bills are likely to shoot up by more than 40% in October.
Ministers are under intense pressure to act after the Ofgem chief executive, Jonathan Brearley, wrote to the chancellor on Tuesday to tell him that the energy price cap, which puts a ceiling on domestic bills, is likely to hit £2,800, an increase of more than £800, after a sharp rise in April.
“The price changes we have seen in the gas market are genuinely a once-in-a-generation event not seen since the oil crisis of the 1970s,” Brearley told MPs on the business, energy and industrial strategy (BEIS) committee.
Treasury officials have been working up plans for a windfall tax that could fall on not just North Sea oil and gas producers but also electricity generators, including windfarm operators, which have also benefited from soaring global prices in recent months.
That is likely to be used to fund a direct energy bill rebate as part of a package that could be worth up to £10bn.
Alongside targeted help for low-paid workers, Boris Johnson is believed to favour steps that would benefit middle earners, such as a VAT cut or bringing forward the 1 percentage point income tax cut that Sunak has promised for 2024.
The pair have competing economic visions, and Tory MPs have become increasingly frustrated that a standoff between them has delayed radical action to help the struggling families they are seeing in their constituency surgeries.
Several cabinet ministers, including the energy secretary, Kwasi Kwarteng, and the Brexit opportunities secretary, Jacob Rees Mogg, have made clear their
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