Sunak U-turns on ‘energy profits levy’ in £15bn cost of living package
Rishi Sunak bowed to months of pressure over the cost of living crisis with a £15bn package of support, part-funded by executing a remarkable U-turn to impose a windfall tax on energy companies.
Announcing the measures on Thursday, in a bruising week for the government, the chancellor said his “significant set of interventions” would help the poorest in society – with a one-off £650 payment for 8 million families on means-tested benefits, alongside an extra £200 for all energy bill payers that will not have to be repaid.
After months of rejecting Labour calls for a windfall tax on energy giants, Sunak announced what he called a “temporary targeted energy profits levy”, which is expected to raise £5bn.
He was forced to deny the package had been brought forward in order to generate positive headlines after Sue Gray’s final report exposed the culture of alcohol-fuelled parties in Downing Street. “I can categorically assure you that that had no bearing on the timing,” he said.
Thursday’s announcement was far more ambitious than had been predicted – and was broadly welcomed by charities and the influential Institute for Fiscal Studies, which described it as a “genuinely big package of support”.
Critics warned, however, that the measures still only amounted to a “sticking plaster” that failed to tackle longer-term pressure on households, and would need updating should the cost of living emergency fail to abate next year.
Rachel Reeves, the shadow chancellor, said Sunak’s about-face on the windfall tax showed Labour was “winning the battle of ideas in Britain”, while arguing that the move came months too late and was not accompanied by a long-term plan to deal with soaring living costs.
“Today it feels like the chancellor has finally
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