Chancellor Rishi Sunak is expected to cave in to pressure to impose a windfall tax on the soaring profits of oil and gas firms when he unveils a significant package to ease the cost-of-living crisis.
Treasury sources did not deny reports he would use his announcement on Thursday to scrap the requirement to repay the £200 discount on energy bills, and could increase the level of the grant.
It is expected that he will make a statement to the Commons at 11.30am.
Mr Sunak will detail his plan in the Commons as the Government seeks to draw a line under the partygate row and focus on the squeeze in living standards caused by soaring inflation.
What is expected to be included
Measures which have been discussed as part of a package worth around £10 billion could also include a further increase to the warm homes discount to help low-income households cope with rising energy bills.
Other measures which have been discussed include increases in the winter fuel allowance, a further cut in council tax or a VAT cut.
Energy costs expected to rise again
The need for extra help was illustrated by Ofgem chief executive Jonathan Brearley’s indication that the energy price cap will increase by a further £830 to £2,800 in October.
Ministers have spent months criticising the idea of a windfall tax because of its potential impact on investment.
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But on Wednesday a Tory source said the arguments had been “tested rigorously” within both the Treasury and wider government.
Reaction to windfall tax
Offshore Energies 海角视频 (OE海角视频), which represents the offshore oil and gas industry, has warned a one-off tax on North Sea firms would see higher prices and do long-term damage to the oil and gas industry.
The Chancellor will need to be careful that any extra help he puts in to the economy does not add further to inflation, which is running at a 40-year high.
As well as the possible impact on inflation, the Chancellor’s ability to help beyond the £22 billion package already announced will also be restricted by the state of the nation’s finances.
A Treasury spokesman said: “The Chancellor was clear that as the situation evolves, so will our response, with the most vulnerable being his number one priority.
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