Boris Johnson has said his successor will “plainly” have to provide further direct cash payments to help Britons cope with soaring energy bills in an apparent message to Tory leadership favourite Liz Truss.
The foreign secretary, strong favourite to beat Rishi Sunak in the Tory contest, has yet to commit to any extra financial payments to ease the pain coming in October – when annual gas and electricity bills are set to rise to £3,549.
Johnson put pressure on Truss to commit to extra direct payments by suggesting more cash support was inevitable, as he responded to Ofgem’s announcement of an 80 per cent rise in the energy price cap,
He said the existing “pipeline” of government support cash “is clearly now going to be augmented, increased, by extra cash that the government is plainly going to be announcing in September”.
Chancellor Nadhim Zahawi said he could not commit to any further help on energy bills – saying he could only “develop options” for either Truss or Sunak, depending on who becomes PM early next month.
The chancellor, a Truss backer, also claimed “help is coming” – saying he would prefer further “targeted” support for the poorest from the next PM.
Johnson also indicated he favoured targeted support, rather than subsiding all households. “What don’t think we should be doing is trying to cap the whole thing for absolutely everybody, the richest households in the country.”
Despite his comments, Truss has yet ot commit to extra cash. Writing in the Daily Mail on Friday, the frontrunner promised “decisive action” to deliver “immediate support” on energy bills in an apparent change of tack.
She then repeated her previous pledges to cut taxes, including by reversing the national insurance hike, and axing green levies on energy bills.
The Tory contest favourite argued it was not “right” to announce the full plan before the contest is over or she has seen all the analysis being prepared in Whitehall.
But Truss and business secretary Kwasi Kwarteng – tipped to be her chancellor is she wins – have discussed new options such using Universal Credit to boost support for vulnerable households, according to The Times.
Sunak – who has pledged around £5bn in additional direct payments for the most vulnerable through the benefits system – attacked his rival’s Truss plan to prioritise tax cuts.
Tax cuts “don’t do anything to help those in need”, the underdog said, responding to the price cap rise. My priority is the most vulnerable in society, including pensioners, and I want them to have certainty that extra help is coming – that’s what I would put in place.”
There have been question marks over how soon Truss – or Sunak – would be able to do an emergency budget with proper forecasts by the Office for Budget Responsibility. Truss has promised a “fiscal event” in September.
But on Friday the OBR confirmed in a letter to MPs on the Treasury select committee that it already begun work on a forecast on 29 July following agreement with the Treasury. The OBR would be in a position to publish such a forecast alongside a potential emergency “fiscal event” in September, the committee confirmed.
Earlier this year then-chancellor Sunak announced that all households would get £400 discount on their energy bills in October, with an extra £250 for eight million most vulnerable households.
The Institute for Fiscal Studies (IFS) said the announced price rise will add an extra £490 for a typical household’s energy bill over the period from October to December.
The think tank said the support package announced by then-chancellor Sunak in May will now only cover 47 per cent of the rise, and it will cost a further £14bn to cover the same proportion of the increase in bills.
“Whoever becomes the next prime minister will most likely be announcing a substantial package of support very soon after taking office,” said Isaac Delestre, research economist at the IFS.
In a similar assessment, the Resolution Foundation said the price cap rise meant winter energy bills are set to average around £500 a month for the three months from October.
The Resolution Foundation has suggested a “solidarity tax” of 1 per cent, and a new social tariff scheme which could reduce bills by 30 per cent.
Labour leader Keir Starmer has said it is “unforgivable” for the government to be“missing in action” during the cost of living crisis while waiting for the Tory race to conclude.
He asked Johnson “where are you?” as it was announced on Friday. “You’ve got a prime minister who insisted on staying in office, recognises there’s a problem with energy prices, shrugs his shoulders and does nothing about it.”
Sir Keir added: “You’ve got two leadership candidates who are fighting with each other about how appalling they have been in government, but neither has come up with any plan to deal with this problem. Unforgivable.”
