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

Sir Mike Rake says Rishi has done the right thing with windfall tax

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.

Read more: Rishi Sunak's £15bn giveaway will save lives, says energy boss

Read more: Marr: Sunak threw the kitchen sink at the cost-of-living crisis but it comes at a cost

Sir Mike Rake reacts to EasyJet cancelling 200 flights

“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.

More Nick Ferrari

See more More Nick Ferrari

Rishi Sunak’s job is under threat from a plot of backbench Tory MPs who want to replace him with Penny Mordaunt before the general election.

Tories 'need to stop messing around and get behind the Prime Minister,' Business Secretary tells LBC

Exclusive
'This is trivia': Kemi Badenoch hits out at continued furore over Tory donor 'racism' row

'This is trivia': Kemi Badenoch hits out at continued furore over Tory donor 'racism' row

Government suspends tariffs on key imports to boost SMEs launching £660 million northern powerhouse fund

Government suspends tariffs on key imports to boost SMEs launching £660 million northern powerhouse fund

'Floating voters' unconvinced by Jeremy Hunt's Budget

LBC's 'Floating Voters' left unconvinced by Jeremy Hunt's Budget

Leila Khaled, who hijacked planes, will appear via video link at a fundraiser hosted by the Palestine Solidarity Campaign. Andy Street wants police to look at the event

'I'm not comfortable with it': West Mids Mayor to speak to police amid fury over Palestinian hijacker’s fundraiser

Andy Street taking calls from the public on Nick Ferrari at Breakfast

Tory MP's claim that Birmingham has 'no-go areas' was 'ridiculous', West Midlands Mayor tells LBC

Minister quizzed on tweet where he described Trump as 'cancer'

Minister Bim Afolami says tweet in which he referred to Donald Trump as 'a cancer' is appropriate

Lee Anderson

Police 'looking into hate speech complaint against Lee Anderson' after MP said Sadiq Khan was controlled by Islamists

Richard Tice said he turned down two Tories who tried to join the party

Reform UK leader Richard Tice says he rejected two Tory MPs who tried to defect in the last year

Michael Tomlinson repeatedly refused to answer Nick Ferrari's question

Nick Ferrari cuts off minister who refuses to answer his questions nine times over Lee Anderson's 'Islamophobic remarks'

Rishi Sunak is facing a revolt for sacking Lee Anderson

Lee Anderson refuses to apologise for 'Islamist' comments as he doubles down on criticism of Sadiq Khan

Rishi Sunak is facing a revolt for sacking Lee Anderson

PM denies Tories have 'Islamophobic tendencies' as minister says Lee Anderson's comments were 'profoundly wrong'

Dame Esther Rantzen has told LBC why she is campaigning to change the law on assisted dying

‘Dogs get treated better than humans’, Esther Rantzen says, as TV legend demands assisted dying law change

Rishi Sunak (l) puts on a brave face to the Tories by-election defeats on a visit to Harlow. New Kingswood MP Damien Egan (top r) and Wellingborough MP Gem Kitchen (bottom r)

Rishi Sunak begs frustrated Tories 'not to put Starmer in power' after party suffers double by-election disaster

New Labour MPs Damien Egan and Gen Kitchen

'They are not very good results': Tory chairman admits after double by-election drubbings as MPs call for tax cuts

The peer was speaking to LBC's Nick Ferrari at Breakfast

'It was known yesterday' Azhar Ali had made more Israel conspiracy theory comments, peer tells LBC