The Chancellor whose government spent thousands of pounds teaching civil servants how to juggle balls, while millions of households facing the cost-of-living crisis tried to juggle their bills, is now scrambling to help us in a meaningful way.
It’s a huge u-turn from the Chancellor who couldn’t care less a week ago.
At a time when the government has been enjoying record tax receipts – having raised taxes 15 times since Boris Johnson became prime minister and due to inflation that increases the tax attached to certain commercial items (like fuel) – Sunak had rejected proposals to reduce the tax burden on ordinary people.
Only days ago, Tory MPs rejected calls for a 40 per cent cut in fuel duty and VAT after a petition received more than 102,000 signatures, thereby forcing a discussion in the Commons.
The Government used a false argument that drivers are already saving £1,900 on their annual fuel bills compared with what they might have been paying had a pre-2010 fuel duty escalator remained in place. The pre-2010 rates were altered because times had changed; times have changed again.
And Sunak himself has been dodging the issue, claiming he could not affect the global circumstances driving the crisis. But that isn’t what he has been asked to do.
He had been asked to respond to the crisis in a way that saves ordinary people from impoverishment and prevents a recession and, until today, he had shown no interest in either goal.
George Dibb, in The Guardian, claimed solutions were staring Sunak in the face. He said:
Sunak’s first step should be investing in social security via increases in universal credit and legacy benefits to prevent families falling into destitution.
Second, we need a serious industrial strategy to boost confidence, give long-term business certainty and restore investment in the UK’s productive capacity. Sunak promised to increase private investment with a “super-deduction” incentive, but in fact it fell in the last quarter. To make this long-term vision work, Sunak should break up the Treasury and form a new Ministry for Economic Strategy with the target to drive investment-led, green growth.
Third, rather than continuing to slip on our green ambitions, every home should be insulated and more wind turbines erected across the UK in an investment needed before 2050 anyway. Green power is now the cheapest way of generating energy.
Next, the government must make clear to businesses that just as they were supported in the pandemic, now companies must themselves act responsibly by reducing their profits to keep prices down. Profits have gone up, particularly in uncompetitive, concentrated sectors – so for example petrol stations haven’t passed on the fuel duty cut to customers, benefiting their bottom line at the public’s expense. Evidence from the US suggests that recent rising prices have been disproportionately driven by rising profits, not wages.
Finally, as fossil fuel companies pile up huge, unexpected profits from the crisis that is pushing millions into absolute poverty, it is fair for the government to redistribute these into welfare and income support via a windfall tax.
Well, as I was typing this, Sunak u-turned on his opposition to a windfall tax and will impose a 25 per cent levy on oil and gas firms’ soaring profits, for precisely this purpose.
This isn’t a display of leadership; he has merely caved in to a reasonable proposal that he has previously – unreasonably – rejected.
Sunak is saying that his one-off charge will “tax extraordinary profits fairly and incentivise investments” – so it seems likely he will offer firms a chance to avoid paying the full amount by diverting the money into investment in green – unpolluting – fuel development.
This is another admission of failure, of course. Boris Johnson and others have spent weeks – months? – telling us they didn’t want a windfall tax because they wanted these companies to make the investments on their own initiative. Clearly they have not and, having ignored the carrot, must now endure the stick.
Sunak is using the money to scrap his hugely unpopular and controversial plan to provide £200 to everyone in England, Scotland and Wales in October – and then force us all to pay it back over the following five years.
Instead, he is doubling the amount to £400, which will be non-repayable; we get to keep it.
The poorest households will also get a payment of £650 to help with the cost of living. Eight million households on means-tested benefits will get the money paid directly into their bank accounts in two lump sums – one in July, the other this autumn.
There will also be separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits – groups who are “most vulnerable to rising prices”.
The whole package of payouts will be worth £15 billion – to be partly paid by the windfall tax. We know that inflation is set to increase UK tax receipts by £12.5 billion per year. And of course the National Insurance increase will bring £13 billion into the Treasury.
So the Tory government will still be quids-in and the offer to the people is, to quote Boris Johnson, “chickenfeed”.
But it looks good – and that is all Sunak hopes to achieve.
Remember: prime minister Boris Johnson took a huge hit to his credibility when Sue Gray published her report on the party culture he promoted at Downing Street while the rest of us were enduring Covid-19 lockdowns.
Johnson attended and fully participated in these parties and then lied about them to Parliament and to the public. His claim that he was assured they were permissible because they were “works events” is nonsense because such gatherings were not exempted from lockdown rules when he himself announced them – and he must have known that (otherwise he would be admitting he is too stupid to run the UK).
So Johnson currently stands exposed as unprincipled, untrustworthy and corrupt – a despot who habitually ignores his own laws and treats those he forces to conform to them with contempt. That’s you, by the way.
He desperately needs to bribe the public with an incentive to support him again.
So today, here’s Sunak with a handout for us all. How utterly cynical.
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