Orkney and Shetland MP, Alistair Carmichael, has today warned that the government is “playing catch-up” with partial measures and u-turns on the cost-of-living crisis. Every household in the UK is to get an energy bill discount of £400 this October as part of a package of new measures to tackle soaring prices, with a previous requirement to repay the “loan” over time removed. The poorest households will also get a payment of £650 to help with the cost of living, Chancellor Rishi Sunak has said. There also will be separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits.
The shift in policy from the government comes as the energy price cap is set to rise a further £800 in October. Ofgem warned that 12 million households could be pushed into fuel poverty, where they are paying more than 10% of their household income on energy.
The measures will be partially funded by a windfall tax on energy companies’ profits, despite the Conservatives previously attacking such a proposal. The government has refused to consider a cut to VAT which has been proposed by the Liberal Democrats to reduce families’ bills.
Responding to the news, Mr Carmichael said:
“Action on the cost of living has been far too slow from this government – they are only playing catch-up now. The cancellation of the “enforced loan” and measures to support those on the lowest incomes are a positive step but will take too long to arrive and only go part of the way towards reducing the massive tax burden pushed on the country by the Conservatives. It is likely that most families will still be significantly worse off come the winter fuel cost spike. Cutting VAT across the board as my party have advocated would be a simple way to save families money on their day-to-day bills.
“The belated move to tax excess profits from energy companies is a positive step but it is a little ironic given that the government spent months ridiculing the proposal. I am not usually a fan of one-off tax rises of this sort. Given the sheer volume of profit being generated by these companies as a result of soaring energy prices, however, this was the right thing to do and I am glad that the Conservatives and indeed the SNP have finally caught up with the Liberal Democrats on this policy.
“Some might suggest that the timing of this announcement is less about supporting households and more about moving headlines and saving the Prime Minister’s skin after the damning Sue Gray report this week.
“Even if it is for the wrong reasons, we have to hope that these new measures today will go some way to blunting the hammer blow for families. If they do not then discontent with this drifting government is only likely to grow.”