The Government has finally announced new measures to tackle sharply rising energy costs and inflation.
Labour has been calling for the windfall tax policy for the last 5 months. While the unnecessary delay is frustrating, action now is better late than never, and any new measures that will support struggling households through the current crisis are welcome.
The Chancellor has committed to a ‘temporary targeted profits levy’ to tax the extortionate profits of energy companies – essentially adopting what Labour has long been calling for.
He has also committed to send around 8 million households – those in receipt of welfare benefits – a one-off ‘cost of living payment’ of £650.
There will also be a ‘pensioner cost of living payment’ of £300 and a £150 payment for 6 million non-means-tested disability benefit recipients.
And the dodgy ‘buy now pay later’ loan which Labour campaigned against has been scrapped, and converted into a grant.
Some of these measures are welcome and will ease the burden on many who are struggling – at least initially. But it’s hard not to be cynical about the timing of the announcement, with the Government once again under significant pressure over the findings of the Sue Gray report.
And the Chancellor claims that he is providing a total of £37bn in cost of living support this year, but most of that just compensates for the £35.4 billion of personal tax rises he has announced over the next two years.
Fundamentally, this is a chaotic, discredited and rudderless Conservative government whose policies rarely last more than a few months.
We should have had an Emergency Budget to spike the hike in National Insurance, cut small business rates, provide help for energy intensive firms and ensure that every pound of taxpayers’ money is spent wisely.
But what’s really crucial is: where is the Government’s long term plan for growing and protecting our economy? We need to fix the causes, not just the symptoms of the cost of living crisis.
More important questions over the Government’s new measures remain.
It’s not clear when people will be getting means-tested support – the only reference is that initial support will be provided “from July” and then the vague “in Autumn”. It even says that tax credit claimants, of which there are 1.7m, are being told they will get their payments “shortly after” that. This Chancellor’s track record on getting payments out on time does not fill us with confidence that they will be with households before Winter energy bills start landing.
Additionally, the £400 grant is only from October – other universal support measures such as the temporary cut in VAT on domestic energy that Labour called for could be delivered much more quickly providing immediate support to households.
It also looks like the £400 grant may go to every domestic energy account – which would mean people with multiple homes will benefit more than once.
It was noticeable that the announcements contained no support for businesses facing steep rises in energy costs, including energy intensive sectors like steel and ceramics. Labour’s plan included a contingency fund for these sectors and a tax cut for small business.
And many of the issues with the universal grant support remain. It’s good that the Chancellor u-turned after Labour pressure on his buy now pay later scheme, but it’s still unclear whether landlords will be required to pass it on to their tenants, and when and how prepayment meter customers will get support?
Labour have a plan for our long term energy security, and a long term plan to grow the economy.
As part of our five point plan for energy security, we will:
- Insulate 19 million homes in a decade, cut gas imports by 15% and cut bills by up to £400;
- Double our onshore wind capacity to 30GW by 2030, to power an extra ten million homes;
- Increase offshore wind capacity to at least 75GW by 2035;
- Triple solar power by 2030, back tidal power and further investment in hydrogen;
- End the delay on nuclear power, confirming Sizewell C and backing small modular reactors.