Sage Sunak is facing intense pressure from conservative colleagues to take measures to reduce the cost of living in this month’s spring statement, which has increased dramatically due to Russia’s aggression in Ukraine.
Asked about the impact of sanctions on Russia for consumers at home, Business Secretary Kwasi Quarteng told MPs on Wednesday that he believed the people were “willing to suffer” in solidarity with the people of Ukraine.
But many conservative MPs, both privately and publicly, are urging the chancellor to do more to soften the blow, and a source suggested that Treasury officials are already drawing on possible policy options.
Sunak’s 200 200 energy bill-cutting package in February, must be repaid within five years, and the £ 150 council tax rebate was already criticized as too small to significantly reduce the impact for many families.
A new analysis by the Institute for Fiscal Studies (IFS) suggests that the impact of the war on energy prices means that these measures can now protect consumers from only a fifth of the impending growth. “The standard of living will suffer across the board,” they warn.
The IFS estimates that it will now cost an additional bn 12bn to provide the same level of protection as Sunak plans. Its director, Paul Johnson, said the chancellor must make a “huge verdict”.
“Will he do more to protect families from the effects of rising energy prices in the last two weeks? If he doesn’t, many middle-income people will suffer the most, at least since the financial crisis. If he does, it will be another big blow to public finance, “he said.
Treasury sources have rejected the idea of dropping the national insurance hike due to take effect in April, saying the spring statement would be “policy-light”, but Sunak did not rule out further action on living standards.
Labor leader Carey Starmer used the PM’s questions to repeatedly link the crisis of life to the effects of the Ukraine invasion. He called for more direct help in cutting energy bills, including a windfall tax on oil companies, but also called for urgent steps to reduce dependence on hydrocarbons, including the lifting of de facto bans on new coastal wind projects.
Johnson rejected the idea of a windfall tax, saying: “The net result is that oil companies will raise their prices, and make it harder for them to do what we have to do… and move away from reliance on Russian oil and gas. That’s the decent thing to do, and it should end there. “
Starr responded sarcastically: “I don’t think the Prime Minister understands the mess.”
Conservative MPs underlined the scale of the challenge during a subsequent Quarteng statement on the phasing out of Russian oil, with former Housing Secretary Robert Jenner warning: “I think we need to prepare ourselves for the greatest impact on our quality of life.”
Robert Halfon, chairman of the Education Selection Committee, urged ministers to echo Ireland’s approach to reducing fuel tariffs. “We must do the same,” he said. “Pump prices for hard-pressed drivers have reached £ 1.60 per liter. They are paying about 16 16 more than a year. Howllers are paying more than পা 120 each time they fill the pump, and that’s literally impossible for many people. “
Richard Fuller, MP for North East Bedfordshire, has called on the government to do more to curb housing in an effort to reduce energy demand.
Former business secretary Andrea Lidsom told the Guardian that no alternative should be blown up – including taxes on energy companies, which are making record profits.
“The Chancellor will undoubtedly look to further action, in addition to the energy support he has already provided,” he said. “In such an unprecedented time, every solution should be on the table – from an emergency focus on home insulation to rapid deployment of batteries to save wind and solar energy, and even increasing short-term production in the North Sea Basin and more.” On the big oil companies. “
The Sunak backbench is holding roundtable meetings with Conservative MPs to discuss ways to reduce the impact of the rising power bill, although one attendee said the chancellor emphasized the poor state of public finance.
Speaking this month after a lecture at the London School of Economics, Sunak acknowledged that more could be done.
He noted that part of the cost of the Living Support Package will continue to be to help customers in the fall, but added: To help the economy, to help families and people can judge me on my track record of how we do it. “