UK prime minister Boris Johnson on Friday admitted that the government’s existing £37bn cost of living package may not be enough to support struggling households, as Liz Truss, the frontrunner to replace him, rejected calls for windfall taxes to limit the pain of rising energy bills.
Johnson, who will leave office next month, said in north Wales that he would not “pretend” the economic situation was easy for the public, adding that ministers were focused on ensuring that the Treasury had “fiscal firepower” to help households in autumn.
Asked if current support measures were enough, he said: “No, because what I’m saying what we’re doing in addition is trying to make sure that by October, by January, there is further support and what the government will be doing, whoever is the prime minister, is making sure there is extra cash to help people.”
Earlier this year, the UK announced a £37bn package of measures, including one-off payments of £650 to those on means-tested benefits; £400 to ease the cost of energy bills; and £300 to the estimated 8mn pensioner households in receipt of the winter fuel payment.
“I think it is very important for people to understand, most people have not yet received the help the government has already allocated,” Johnson added. “So over the course of the next couple of months you will see about 8mn households get another £326, you will see everybody in October get help with the energy support scheme.”
Downing Street has ruled out making any major fiscal interventions before September 5, when a new prime minister is announced, despite warnings from Martin Lewis, founder of the MoneySavingExpert website, and former prime minister Gordon Brown that urgent support is needed.
Energy consultancy Cornwall Insight has estimated that the energy price cap on customer bills could increase from its current rate of £1,971 a year to £4,427 by next April.
Chancellor Nadhim Zahawi on Friday said the government was “looking at all the options” to help people through the winter. “We’re making sure we’re doing the work so on September 5 the new prime minister can hit the ground running and get those things into place,” he told Sky News.
Johnson’s comments came after Truss on Thursday reiterated her opposition to imposing windfall taxes on oil companies, arguing that it amounted to “bashing business” and sent “the wrong message to international investors”.
The foreign secretary’s economic pledges include tax cuts worth about £30bn, the reversal of the national insurance rise and a temporary moratorium on the green energy levy.
“One thing I absolutely don’t support is a windfall tax,” she told Conservative party members during hustings in Cheltenham in the west of England. “I don’t think profit is a dirty word, and the fact it’s become a dirty word in our society is a massive problem,” Truss added.
In May, the UK introduced an energy profits levy on oil and gas companies, however, record profits reported by the sector have promoted renewed calls for further invention.
Shell, Europe’s largest oil company, reported adjusted earnings of $11.5bn in the second quarter of this year, while the operating profits at Centrica, UK’s biggest energy retailer, rose to £1.3bn between January to June.
Meanwhile, former chancellor Rishi Sunak has attacked his rival’s plans, arguing that tax cuts would do little to help the most vulnerable in society.
“There are two groups of other people who will need more help: people on very low incomes and pensioners. Now, Liz Truss’s tax plans do virtually nothing for those people,” he said in an interview with Times Radio on Friday.