The Chancellor of the Exchequer has announced a series of measures to help tackle cost of living increases. The package of measures is focused on providing financial support to households, in particular, the most vulnerable.
Much of the funding will come from a windfall tax on the profits of oil and gas producers.
Summary of the key announcements
Temporary Energy Profits Levy
• Levy on 25% on profits Oil and Gas Sector
• Steps also taken to double the investment relief for oil and gas sector – “the more a company invests, the less tax they will pay”
• The tax will take effect immediately, from 26 May 2022, and will be legislated for via a standalone Bill to be introduced shortly.
• In future years, if oil and gas prices return to historically more normal levels, the Government will phase out the Energy Profits Levy, and also the legislation will include a sunset clause, effective at the end of December 2025.
• Stated to raise £5bn
Support for those on lowest incomes
• Energy Bills Support Scheme doubled to a one-off £400
• £650 one-off Cost of Living Payment for those on means tested benefits
• One-off £300 Pensioner Cost of Living Payment
• £150 Disability Cost of Living Payment
• £500m increase and extension of Household Support Fund
Geoff Mason, policy manager at the North & Western Lancashire Chamber of Commerce said:
“The Chancellor has made these announcements following increased pressure to act. While many households will undoubtedly welcome the steps taken, businesses are left with no support.
“Businesses have been dealing with the same price increases as consumers such as energy and fuel, while also dealing with huge increases in raw materials, transportation, and wage inflation. There are also problems with supply chain disruption and recruitment difficulties.
“There is a need to support businesses through these extremely difficult times. We once again call for the government to consider the actions set out in the British Chambers of Commerce call for an Emergency Budget. A reversal of the increase in national insurance contributions and a reduction of VAT to 5% on businesses’ energy bills would help ease some of the cost pressure faced by business.
“This would help reduce the need for businesses to raise their prices – leading to further inflation – and, in the case of the national insurance reversal would also keep money in the pockets of consumers.
“If businesses are to be the driver of growth to generate growth and the high-skilled, high-wage workforce promoted by the government, now is the time to support them so they can keep people in work while maintaining investment in innovation and skills.”
