Rishi Sunak has moved to assure people that the £15bn cost of living package he recently announced will only “minimally” add to the UK’s inflationary pressures.
The chancellor today told Westminster’s Treasury Select Committee that he had been careful “to make sure fiscal policy was responsible in that context”.
The chancellor last month performed a major U-turn and announced a windfall tax on British oil and gas firms in order to help pay for a package of measures to help people with rising energy bills.
The measures will mean that everyone will get hundreds of pounds of direct payments from the government, with more money targeted at the lowest-wage workers and pensioners.
There have been concerns that the universal nature of the payments will lead to increased inflationary pressures in the UK at a time where prices are already soaring.
Annual UK inflation hit a 40-year high of 9 per cent in April and the Bank of England now expects growth in the Consumer Price Index (CPI) to hit double digits this year.
“We are trying to make sure we are targeting those whose incomes are hardest hit, but we do not want to be fuelling extra discretionary spending,” Sunak said.
“This is a package which will have, we believe, a minimal impact on inflation, but inflation nonetheless.
“What we’re doing is doing it in a responsible way so it’s going to those people who are going to spend it on things that are absolutely necessary for them to have a standard of living that we think would be appropriate.”