Thank you for contacting me about the cost of living crisis.
Current inflation is being driven by rising energy costs, provoked by surging demand after the pandemic as well as Russia’s invasion of Ukraine, which in turn has put pressures on living costs.
Government support announced during Boris Johnson's premiership to help with cost-of-living pressures is worth over billion £37 billion in 2022-23. An Energy Bill Discount removes £400 off energy bills for households in Great Britain. Further, a non-repayable £150 cash rebate has been provided for homes in Council Tax bands A-D (equivalent to 80 per cent of all households) and £144 million of discretionary funding for local authorities to support those not eligible for the council tax rebate. Accordingly, all households will receive £550, with lower income families receiving additional help. The Government is also providing a £650 one-off cost of living payment for those on means-tested benefits such as Universal Credit, job seekers allowance and pension credit and a £300 one-off Pensioner Cost of Living Payment for pensioners in receipt of the Winter Fuel Allowance, while individuals on disability benefits received an additional, one-off £150 payment in September.
The Government will continue providing this year’s cost of living payments and next year it will provide extra one-off payments of £900 for the 8 million households on means-tested benefits, a second £300 Pensioner Cost-of-Living Payment and another £150 for disability benefit recipients. The Chancellor also announced that the Government will provide £1 billion of extra funding by extending the Household Support Fund for another year, bringing the total of the Fund to £2.5 billion.
Action has also been taken to raise the National Insurance threshold, cut the Universal Credit taper rate, and raise the National Living Wage.
On top of £37 billion support announced by the Boris Johnson government, an Energy Price Guarantee (EPG), has since come into force, which discounts the unit cost for gas and electricity use. In his recent Autumn Statement, the Chancellor announced that the EPG will remain in place until April 2024.
I strongly believe that properly regulated private markets are the best way to meet the ongoing needs of energy customers and the environment. While I appreciate your strength of feeling on this issue, I am unaware of any plans to nationalise the energy sector. This would hit the energy companies at a time when the Government needs to encourage them to produce more as we need to transition to cleaner fuels.
The independent regulator, Ofgem, monitors energy prices and the broader energy market. Often the best way for consumers to achieve a better deal on their energy bills is by switching energy supplier. I understand the Centre for Policy Studies published a report in 2018 which found that the cost of nationalising the UK's energy industry would be £55.4 billion.
However, is only fair that companies who have made genuine windfall profits as a result of the war in Ukraine make an additional contribution to help to pay for the support the Government is providing. So from 2023, the Energy Profits Levy rate will rise from 25 per cent to 35 per cent and will continue until the end of March 2028.A 45 per cent Levy will be applied to extraordinary returns made by electricity generators. In total these windfall taxes will raise £52 billion over six years.
Further, the UK does not have a comprehensive, single wealth tax, but it does have several taxes on assets and wealth. These taxes operate across many different economic activities, including the acquisition, holding, transfer and disposal of assets, and income derived from assets.
The new Prime Minister, Rishi Sunak, has set out his vision to place economic stability at the heart of this Government and pledged to stand by the most vulnerable. That is why I was encouraged to see the commitment to uprating benefits in line with inflation and keeping the triple lock on pensions announced in the recent Autumn Statement.
Rishi Sunak has been clear that he will deliver on the mandate secured in 2019 to deliver a stronger NHS, better schools, safer streets, and control of our borders.
Again, thank you for taking the time to write. If you require any further assistance, then please do not hesitate to get in touch.
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