Former CBI chief: Rishi’s £400 for bills is the 'right thing' in a perfect economic storm

27 May 2022, 08:19 | Updated: 27 May 2022, 08:25

By Asher McShane

Former President of the CBI Sir Mike Rake told LBC today that Rishi's £400 grant for people's energy bills is 'the right thing' to have done as the economy faces a 'perfect storm'.

Former Chairman of EasyJet Sir Mike told Nick Ferrari at Breakfast: “The pound is quite weak at the moment which adds to inflation pressures.

“We have a productivity conundrum we never really got on top of.

“Whether people like it or not we have a lot of frictional costs of Brexit. It’s really a perfect storm.

“I think the Chancellor has done the right thing in trying to bring aid to the people who most need it.

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“It’s a shocking reminder that we have 8m households on credit or benefit. It’s kind of a national embarrassment.

“I do think there are issues around the principle of windfall taxes.”

Sir Mike's comments come after Rishi Sunak has insisted he did not time handing out £21 billion worth of cost-of-living support to deflect from the controversy over Downing Street lockdown parties.

The Chancellor bowed to demands for the UK Government to step in and help households to deal with ballooning energy bills and rising shop prices, which are being fuelled by 40-year-high inflation, by revealing an emergency package of extra cash for millions of people.

Every household will receive a £400 energy bill discount while extra support was also unveiled for the lowest paid, pensioners and those with disabilities.

Under the plans, almost all of the eight million most vulnerable households could receive at least £1,200 of support, including a previously-announced £150 council tax rebate.

Mr Sunak confronted criticism that the measures were announced as part of a plan to move the focus on from rule-breaking in No 10 following the publication of senior civil servant Sue Gray's report on Wednesday.

The report contained a photograph of Mr Sunak attending Boris Johnson's surprise birthday bash in the Cabinet room in June 2020, for which the Chancellor and the Prime Minister were both fined £50 by the Metropolitan Police.

In an interview with Martin Lewis, founder of the Money Saving Expert website, the Chancellor was asked whether the fiscal measures had been quickly unveiled to act as a "fig leaf" after embarrassing details of the late-night raucous parties in Downing Street were laid bare.

He replied: "I can categorically assure you that that had no bearing on the timing for us announcing this support, and I can give you my absolute assurance on that and my word.

"The reason we acted today was because we had more certainty about what will happen to energy prices in the autumn."

Industry regulator Ofgem said this week that the typical annual household energy bill is forecast to rise by more than £800 in October when the price cap goes up, having already risen by more than 50% in April.

Measures announced by the Chancellor in the Commons included a one-off £650 payment to low-income households on benefits, paid in two instalments in July and the autumn at a cost of £5.4 billion.

Pensioners will also receive a £300 payment in November/December alongside the winter fuel payment in a move costing £2.5 billion, while £150 will be paid by September to individuals receiving disability benefits.

Mr Sunak announced that £5 billion of the package would be paid for by a levy on the profits of oil and gas giants, and around £10 billion will be covered by extra borrowing.

The Chancellor attempted to avoid calling his plan for a 25% energy profits levy a "windfall tax", as he was accused by Labour of having been dragged "kicking and screaming" into a U-turn on the policy the Opposition has spent months calling for.

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