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Rishi Sunak ‘dragged kicking and screaming’ into U-turn on windfall tax

RISHI SUNAK was accused of offering little more than knee-jerk “quick fixes” today after he was shamed into pledging financial support for households suffering in the cost-of-living crisis and U-turning on a windfall tax of energy firms.

The Chancellor was forced to add emergency measures to a £15 billion package aimed at lessening the impact of soaring inflation, including offering millions a £400 discount grant off their energy bills and a £5bn levy on oil and gas giants.

As well as ringfencing £6bn for the universal payment from October — which does not have to be paid back and replaces his initial plan for a £200 loan — there was targeted support for the poorest, elderly and disabled, Mr Sunak told MPs.

The idea of a windfall tax had faced resistance in government, with Mr Sunak himself appearing to oppose it.

But the Chancellor said his plan for a 25 per cent energy profits levy would be coupled to a new incentive which almost doubles the tax relief firms can claim on their investments.

This would directly encourage companies to avoid the windfall tax by investing in new fossil fuels extraction and “devastating the climate,” the Scottish Greens and environment campaigners argued. 

They called instead for investment in green energy and home upgrades such as insulation.

Shadow chancellor Rachel Reeves said Mr Sunak had been dragged “kicking and screaming” into a U-turn on Labour’s call for a windfall tax.

Labour MP Kate Osborne said the U-turn is “just not enough,” adding: “People will get help with less than half of the increase to energy prices.”

She called for public ownership of energy and a change to the way energy is charged, as the lowest-paid who use the least electricity currently pay the most per unit on pre-payment meters.

“This package does not help people put food on the table, a one-off payment does not deal with a cost-of-living crisis, inflation at record highs and the huge increase in food costs,” the Jarrow MP said.

“For low-income and middle earners this announcement does nothing and Sunak has failed to uprate benefits to meet inflation.”

Unions have also criticised the measure, calling for direct measures to curb the impact of the crisis, including raising raising public-sector wages and an immediate increase of the minimum wage, as well as an uplift for social security payments.

TUC general secretary Frances O’Grady hit out at the government for still not having a plan for giving families long-term financial security.

She said the Chancellor should have acted “far sooner than his inadequate Spring Statement” and that his “dither and delay has caused unnecessary hardship and worry for millions.”

“With energy bills rising 23 times faster than wages we urgently need to get pay packets rising and to pay universal credit at a permanently higher rate — not just a one-off boost,” Ms O’Grady said.

Unison general secretary Christina McAnea warned that the support “took too long and isn’t enough.”

“It’s a quick fix instead of a proper plan to prevent the spread of despair and poverty,” she said. “Rishi Sunak should have gone so much further.”

Unite general secretary Sharon Graham called for a windfall tax on all those who have profited while people have suffered, not just energy firms.

Usdaw general secretary Paddy Lillis said it was disappointing that the support barely covers half the increase in energy costs and the Chancellor has ignored rocketing fuel and food prices.

Greenpeace UK political campaigner Ami McCarthy said: “This is utter stupidity.

“Rewarding oil and gas extraction while doing nothing to encourage investment in renewables will not provide energy security, push bills even higher and pour fuel all over the climate crisis.”

Campaigners and charities have also called for more action such as upgrades to homes, and for measures to go beyond the immediate crisis.

End Fuel Poverty Coalition co-ordinator Simon Francis said that the underlying problem of fuel poverty for millions remains despite the new measures.

And Generation Rent director Alicia Kennedy warned that a freeze on rents, an emergency pause on evictions and an increase in local housing allowances was desperately needed.

Action for Children policy and campaigns director Imran Hussain said the measures “won’t fully shield families with children from the pain they’re experiencing.”

He said: “Ultimately, we need a stronger social security system to ensure all families with children can meet their basic needs.”

Carers Trust chief executive Kirsty McHugh hit out at the plans for shutting our additional support for unpaid carers.

She said: “For millions of unpaid carers, the support announced today will do little more than mitigate new pressures, rather than tackle pre-existing problems.

“It’s way past time for the government to stop ignoring unpaid carers on Carer’s Allowance, and instead make them a priority group for the extra financial support they so desperately need and deserve.”

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