Sunak would study a range of options
Chancellor Rishi Sunak is reportedly considering giving one-time cash payments to households struggling with rising bills.
With data this week showing wages unable to keep up with rising inflation, Sunak is said to be in talks with Prime Minister Boris Johnson and energy chiefs to help tackle the current cost of living crisis. , reports Metro.
Every week, the PMQs follow the same structure; after many questions about corruption, the crisis tends to arise. However, now the Treasury is reportedly looking to issue one-off payments to the UK’s poorest households, according to sources mentioned in the Sun.
The Chancellor is said to be concerned that reducing VAT on energy bills would simply help wealthier households who don’t need it. However, this new program would specifically target the poorest and think tank The Social Market Foundation (SMF) backed the idea.
SMF’s chief economist, Dr Aveek Bhattacharya, said a one-off payment of up to £500 would be the best answer, as it allows families to spend the money as needed. SMF recommended that households without higher rate taxpayers receive £300, but families on Universal Credit or Inherited Benefits receive £200.
“The coming cost of living crisis leaves millions of households facing severe hardship, and millions more are feeling significant pressure on their finances,” Dr Bhattacharya said.
“Clearly some action is needed, but the government should avoid the temptation to over-complicate its response and blur its environmental goals by subsidizing energy.”
He continued: “Instead, it should make direct cash payments to households and leave it to them to determine how best to meet their needs.
“A ‘cost of living premium’, with a higher payment for those on low incomes, would go a long way to helping struggling families and would make it clear that the government is on their side.”
Other ideas have been suggested, including providing loans to energy companies and reducing VAT on fuel bills.
While reducing VAT is apparently the most popular option in the public sphere, Dr Bhattacharya suggests that focusing only on this issue means other areas lose out.
He said: “These options are also somewhat limited in their flexibility to deal with other elements of the cost of living crisis.”