Rishi Sunak has said he is “prepared to act” if energy prices continue to spiral out of control amid speculation he is ready to announce another multi-billion pound council tax rebate later this year.
The chancellor told MPs on the Treasury Select Committee today that “It’s very difficult to sit here today and speculate on what happens to energy prices” and that people should “wait until we get there and then we can decide on the most appropriate course of action”.
Average household energy bills will increase by £700 a year next week and could rise by a further £1,000 by October, after UK and EU sanctions on Russian eenergy exports.
Growth in the Consumer Price Index (CPI) hit 6.2 per cent in the year to February, a 30-year high, which is further putting the squeeze on household budgets.
Sunak announced last Wednesday to cut fuel duty by 5p for 12 months and cut National Insurance, after increasing it in October, in a bid to ease the cost of living squeeze.
Paul Johnson, director at the influential Institute for Fiscal Studies (IFS) think tank, said the average British worker will still be £400 worse off next year despite Sunak’s interventions.
When pushed by the committee on whether he will offer more help to households if energy prices rise by predicted amounts, Sunak said: “None of us know what the [energy] price cap will be in the autumn.
“We’ve said very clearly in the spring statement document that we will continue to monitor the situation and as we know more, we are prepared to act if necessary.
“It’s very difficult to sit here today and speculate on what happens to energy prices, therefore the biggest impact on living standards in autumn. Let’s wait until we get there and then we can decide on the most appropriate course of action. I don’t think anyone knows what that appropriate course of action would be.”
The Sunday Times reports the chancellor could offer a cash giveaway later this year in the form of another council tax rebate, after announcing a £150 rebate in January, in the wake of new polling showing the cost of living crisis is the biggest issue for voters.
Boris Johnson’s deputy chief of staff David Canzini presented the numbers at a briefing of government special advisers on Friday, with one in attendance telling The Times that “the cost-of-living issue is a train about to hit us”.
Whitehall officials have suggested Sunak will step in to cover half of the increase in energy bills later this year.
Sunak in January announced a £150 council tax rebate for all households and a £200 discount on energy bills – which has to be paid back over the next five years – for the majority of households.