Rishi Sunak defends letting second home owners get £400 energy bill rebate twice – UK

The Resolution Foundation thinktank has now published its analysis of Rishi Sunak’s cost of living announcement yesterday. Here are the key points.

• Sunak’s measures are “well targeted”, filling a “big gap” left by the previous announcements this year that did not do enough to protect families on lower incomes, the RF says. It says the impact of all the Sunak measures taking effect this year is now “highly progressive”. This chart shows how poorer households gain as much as three times as much in cash terms than richer households from the measures announced yesterday.

• It says the combined effect of measures announced this year will offset 82% of the cost of rising fuel bills for average families in 2022-23, and more than 90% for poorer families.

• It says the poorest 20% of households will gain £1,195 on average from all the Sunak measures taking effect this year. The middle 20% of households will gain £799 on average, but the richest 20% will lose £456 on average. This chart shows the impact on households of all the Sunak measures taking effect this year, including the national insurance increase announced last year but coming into force from April.

• It says the Sunak measures are more generous than just uprating benefits now by 9.5% would have been. But it says uprating benefits by 9.5% would have been better for families with three or more children, who it says have been “hard done by” in yesterday’s announcement. That is because flat-rate payments to households do not make allowance for their higher costs.

Boris Johnson has given an interview to Bloomberg, extracts from which are being released over the course of the day. Speaking about Ukraine, he said Russia was making “slow but palpable” progress in Donbas. He said:

I think it’s very, very important that we do not get lulled because of the incredible heroism of the Ukrainians in pushing the Russians back from the gates of Kyiv.

I’m afraid that Putin – at great cost to himself and Russian military – is continuing to chew through ground in Donbas, he’s continuing to make gradual, slow, but, I’m afraid, palpable progress. Therefore it is absolutely vital that we continue to support the Ukrainians militarily.

As Bloomberg reports, Johnson said he would like to see further military support going to Ukraine, including more multiple-launch rocket systems that would allow the Ukrainians to strike Russian targets from a greater distance.

He also appeared to dismiss the prospect of negotiating with Vladimir Putin, saying the Russian president was not to be trusted. He said:

How can you deal with a crocodile when it’s in the middle of eating your left leg? The guy’s completely not to be trusted.

Here are the main points from Rishi Sunak’s morning interviews.

• Sunak, the chancellor, urged wealthy people who do not need the £400 energy bills rebate to give it to charity. He would be doing that himself, he said. He also defended the decision to allow second home owners to get it twice. (See 9.34am.)

• He would not rule out a further emergency package of support for people with energy bills, even if it meant more borrowing or taxes. Asked on the Today programme if he was willing to do this, he replied:

People can judge me by how I’ve acted over the last couple of years. I’ve always been prepared to respond to the situation on the ground, what’s happening to the economy, what families are experiencing and making sure we’ve got policies in place to support them through that.

In terms of ‘is it one-off?’, what’s happening next year, I’d go back to what I said earlier. I do want people to be reassured and confident that we will get through this. We will be able to combat and reduce inflation, we have the tools at our disposal and after time it will come down.

If Sunak does have to extend these measures for another year, the impact on borrowing will be considerable. This is what Carl Emmerson, deputy director of the Institute for Fiscal Studies, said on this topic in the IFS analysis published last night.

Today’s announcement is a big package of support for households this year. But it is not without risks. In particular, if oil and gas prices remain high then the government will doubtless come under pressure to continue the additional household support for at least a further year. Extending the 5p cut to fuel duties and the £9bn help with energy bills announced in the March spring statement and the £15bn of additional giveaways for households announced by the chancellor today for a further 12 months would add a further £26bn to borrowing in 2023-24.

• He said benefit claimants could expect an above-inflation increase in payments next year. That is because next April’s uprating will be pegged to the inflation level in September, after which inflation is expected to fall. He said:

What is likely to happen is that benefits and pensions next year will go up by this year’s much higher inflation levels. That is forecast to be much higher than the inflation that people will actually experience next year. So, for all those people they can look at next year and actually feel relatively confident about that.

• He claimed that impact of the measures announced yesterday on inflation would be “minimal”, by which he meant less than 1%, he said. That was because most of the money was going to those most in need, and because the package was partly funded by a tax rise, he said.

• He insisted that he was still a “fiscal conservative”. He said:

First and foremost I’m a fiscal conservative, I believe it’s incredibly important that I manage the country’s finances responsibly. That means after suffering the shock we did to get our borrowing and debt levels back on a sustainable trajectory.

Good morning. It is the day after Rishi Sunak’s cost of living support package announcement, and his third momentous fiscal intervention of the year, after the February energy bills announcement and the spring statement in March, has turned out to be the biggest (worth £15bn). And in some quarters it has turned out to be the best received. The two leading budget thinktanks, the Institute for Fiscal Studies and the Resolution Foundation, have been about as positive about this as they ever are about anything.

But Sunak also finds himself in the situation faced by one of his predecessors as chancellor, Hugh Gaitskell. Gaitskell was only chancellor briefly at the start of the 1950s, but he went on to become Labour leader and in that capacity he gave a speech in 1962 opposing membership of the European Economic Community (because it would mean the end of “a thousand years of history”). It was a terrific speech, and it got a great reception at Labour conference. But as Gaitskell listened to the applause on the platform, his wife Dora warned: “All the wrong people are cheering.”

They probably feel much the same way in the Treasury this morning. The Resolution Foundation says in a new analysis that the impact of all Sunak’s measures this financial year is “highly progressive” (that’s a compliment). But the Resolution Foundation is run by a former Ed Miliband adviser, and the leading Tory newspapers are much more sceptical.

I will post more on the media reaction to the announcement later.

Sunak has been giving interviews this morning and one aspect of the announcement he has had to defend is the decision to allow people with second homes to get the £400 energy bill rebate twice (once…