The Conservative government of Britain unveiled Thursday a 15 billion pound ($19 Billion) emergency aid package to ease a severe cost of living squeeze. It was announced a day after Boris Johnson, Prime Minister of Britain, promised to "move forward" from the months-long scandal involving government parties during COVID-19 lockdowns.
Rishi Sunak, Treasury chief, said that the government will introduce a temporary 25% windfall tax on oil and gas companies' profits. Sunak stated that the tax will raise approximately 5 billion pounds ($6.3billion) in the next year to fund cash payments to millions of people to deal with rising energy bills.
Inflation in the UK reached 9% in April. This is the highest level for 40 years. Millions of customers saw their annual energy bills rise 54% in the same month. That's an average increase of 700 pounds ($863) per household.
Sunak stated that the government will help the most vulnerable people, including the elderly and disabled. A one-time payment of 650 Pounds ($818) will be made to the lowest-income households in the country. Each household will also be eligible for a 400-pound ($503) discount on their domestic energy bills in October.
Johnson's Conservative government made a U-turn on the windfall tax announcement. It had previously stated that imposing one would discourage investment in the U.K. energy sector. The government is being pressured to act, as British households are facing financial hardship due to skyrocketing food and energy bills.
Sunak stated that the temporary levy would continue in effect until "prices return at a more normal level". He also said that an "investment allowance", which would encourage companies to invest in oil-and gas extraction in the U.K., would be added to the levy.
Rain Newton-Smith is the chief economist of big business group, the Confederation of British Industry. He said that the "open-ended nature" of this windfall tax would "be detrimental to investments needed for energy security, net zero ambitions, and investment required for energy security."
Opposition parties and unions argued that the government's assistance was insufficient and too late.
Christina McAnea, general secretary of Unison union, stated that "Across the U.K. families and pensioners fear witless about making ends meet." "The support will make a difference, but it won't be enough."
The UK's energy regulator stated this week that domestic energy bills could rise another 800 pounds per year in the fall due to Russia's war with Ukraine and rising demand following the pandemic.
Johnson's government wants to make a comeback after an investigator's report into what is now known as "partygate", which exposed a culture of rule-breaking within the No. prime minister's office. 10 Downing St. Office.
Sue Gray, a civil service investigator, described the alcohol-fuelled bashes that Downing Street staff members hosted in 2020 and 2021 when pandemic restrictions prevented U.K. residents visiting their dying relatives or socializing.
Gray stated that the senior leadership team must be held responsible for "failures in leadership and judgment".