Cost of living: government to set out new ‘multi billion-pound’ plan to help ease crisis on Thursday

Chancellor Rishi Sunak is reportedly meeting with the Prime Minister to sign off a “multi billion-pound” plan

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A new plan to help people cope with the cost of living crisis is expected to be unveiled by the government on Thursday.

Chancellor Rishi Sunak is widely reported to be meeting with Prime Minister Boris Johnson today (25 May) to “sign off” on a “multi billion-pound” plan, with the announcement due the day after Sue Gray’s partygate report is published.

The expected plan comes after Ofgem chief executive Jonathan Brearley told MPs the regulator is expecting the energy price cap to increase by a further £830 to £2,800 in October.

Mr Brearley said the rise was due to the market coping with “once-in-a-generation” price changes “not seen since the oil crisis of the 1970s”.

Rishi Sunak is reported to be meeting with the Prime Minister to ‘sign off’ the plan today (Photo: Getty Images)Rishi Sunak is reported to be meeting with the Prime Minister to ‘sign off’ the plan today (Photo: Getty Images)
Rishi Sunak is reported to be meeting with the Prime Minister to ‘sign off’ the plan today (Photo: Getty Images)

What measures could be put in place?

Reports suggest that a new windfall tax on energy firms could be used to help those struggling with soaring costs, an option that was previously suggested by Labour and some senior Tories.

A windfall tax is a one-off levy imposed by the government on a company or group of businesses that have unexpectedly benefited from something outside of their control - in this case a surge in oil and gas prices.

Mr Sunak previously ruled out a windfall tax but has since suggested it could be a possibility, saying “nothing is ever off the table in these things”.

The Times has also reported that increases in the warm homes discount, winter fuel allowance and a cut in council tax could also be among the measures introduced, while a VAT cut is said to be mooted.

When will the announcement be made?

A timing for the announcement is yet to be confirmed but it is expected to take place on Thursday, the day after the Sue Gray report into lockdown parties at No 10 and Whitehall is due to be published.

The cost of living plan is reported to be going ahead as a means to take some of the heat off the government following the report release, which is tipped to be highly critical of the culture in No 10.

However, a Downing Street spokesman told the BBC he would “refute any suggestion” an announcement would be timed to distract from the report.

Last week, Mr Sunak gave a speech at the CBI annual dinner, where he said there is a “collective responsibility to help the most vulnerable in our society”.

A government spokesperson said: “We understand that people are struggling with rising prices, and while we can’t shield everyone from the global challenges we face, we’re supporting British families to navigate the months ahead with a £22 billion package of support.

“That includes saving the typical employee over £330 a year through a tax cut in July, allowing people on Universal Credit to keep more of the money they earn – benefiting over a million families by around £1,000 a year, and providing millions of households with up to £350 each to help with rising energy bills.

“The Chancellor has been clear that as the situation evolves, our response will evolve – and we stand ready to do more.”