Millions of households will receive a £400 discount off their energy bills and a £5 billion tax will be levied on oil and gas giants as Rishi Sunak moved to counter the soaring cost of living.
The Chancellor was forced to unveil emergency measures as part of a £15 billion package to tackle the impact of soaring inflation, which has reached a 40-year high.
As well as the universal payment there was targeted support for the poorest, the elderly and the disabled.
The Chancellor acknowledged that high inflation is causing “acute distress” for people in the country, telling MPs: “I know they are worried, I know people are struggling.”
He said the Government “will not sit idly by while there is a risk that some in our country might be set so far back they might never recover”.
But as economist Duncan Weldon pointed out in his blog, Value Added, there is a big unanswered question.
“Implicit to the entire package is a belief that energy prices will fall in 2023. The government is extending extraordinary support to help households cope with, what is hopefully, a temporary period of high global energy prices.
“But it is worth asking: what if prices stay high in 2023? Will the package be left in place? This is the kind of thing HMT civil servants will be worrying about this evening.”
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