PARLIAMENTARY DEBATE
Economy Update - 26 May 2022 (Commons/Commons Chamber)

The high inflation that we are experiencing now is causing acute distress to the people of this country. I know that they are worried. I know that people are struggling. I want to explain what is happening, why it is happening, and what we propose to do about it.

I trust the British people, and I know they understand that no Government can solve every problem, particularly the complex and global challenge of inflation, but this Government will never stop trying to help people, to fix problems where we can and to do what is right, as we did throughout the pandemic. We need to make sure that those for whom the struggle is too hard, and for whom the risks are too great, are supported. This Government will not sit idly by while there is a risk that some in our country might be set so far back that they might never recover. That is simply unacceptable, and we will never allow it to happen.

I want to reassure everybody that we will get through this. We have the tools and the determination we need to combat and reduce inflation. We will make sure that the most vulnerable and least well off get the support they need at this time of difficulty, and we will also turn this moment of difficulty into a springboard for economic renewal and growth, with more jobs, higher skills and greater investment: our plan for a stronger economy.

Before I turn to the details of our plan, let me put into context for the House the challenge we face. This country is now experiencing the highest rate of inflation we have seen for 40 years. The Bank of England expects inflation to average around 9% this year. Our exposure to global shocks continues to explain most of the inflation above the 2% target. Supply chain disruption as the world reopened from covid, combined with Russia’s invasion of Ukraine and potentially exacerbated by recent lockdowns in China, are all contributing to significant price increases for goods and energy.

However, over the course of the year, the situation has evolved and become more serious. There are areas of particular concern. Even excluding energy and food, core inflation has become broader-based and elevated. Of the basket of goods and services we use to measure inflation, a record proportion is seeing above-average price increases. Also, we are acutely exposed to the European energy price shock and, like the US, we have a tight labour market. Make no mistake, the lowest unemployment in almost 50 years, just months after averting a jobs crisis during the pandemic, is good news, but combined with the shock to European energy prices, it does contribute to the UK’s relatively high rate of inflation.

Lastly, as the Bank has noted, longer-term inflation expectations have risen above their historical averages by more than they are doing in the US and Europe. We cannot and must not allow short-term inflationary pressures to lead people to expect that high inflation will continue over the long term. We can get inflation under control. It is not some abstract force outside our grasp. It may take time, but we have the tools we need and the resolve it will take to reduce inflation. We have three specific tools available to combat and reduce inflation, and we are using them all: independent monetary policy, fiscal responsibility and supply-side activism.

First, our primary tool is a strong independent monetary policy. Since control of monetary policy was taken out of the hands of politicians 25 years ago, inflation has averaged precisely 2%. It is right that the Bank of England is independent, and I know that the Governor and his team will take decisive action to get inflation back on target and ensure that inflation expectations remain firmly anchored.

Secondly, we need responsible fiscal policy. That means providing fiscal support where required but not making the situation unnecessarily worse, causing inflation, interest and mortgage rates to go up further than they otherwise would. Excessively adding fiscal stimulus into a supply-constrained economy, especially one in which households and businesses have built up over £300 billion of excess savings, risks being counterproductive and increasing inflationary pressures. In other words, fiscal support should be timely, temporary and targeted. Timely because we need to help people when the shock is at its worst, targeted because unconstrained stimulus will make the problem worse, and temporary because if we do not meet our fiscal rules and ensure the public finances are resilient in the longer run, we create even greater risks on inflation, interest rates and the trend rate of economic growth.

Thirdly, we are taking an activist approach to supply-side reforms. This will increase our productive capacity, ease inflationary pressures and raise our long-term growth potential. The Prime Minister’s energy security strategy will reduce bills over time by increasing energy supply and improving energy efficiency. The Work and Pensions Secretary is moving half a million jobseekers off welfare and into work and doing more to support older people back into the jobs market. The Home Secretary is making our visa regime for high-skilled migrants one of the most competitive in the world, and in the autumn we will bring forward tax cuts and reforms to encourage businesses to invest more, train more and innovate more—the path to higher growth. Independent monetary policy, fiscal response ability and supply-side reform—the country should have confidence that using these three tools, we will combat inflation and reduce it over time.

But of course, we know that households are being hit hard right now, so today we will provide significant support to the British people. As I have said, a critical part of how we are dealing with inflation is responsible fiscal policy. What this means in practical terms is that as we support people more, we need to think about the fairest way to fund as much of that cost as possible. The oil and gas sector is making extraordinary profits, not as the result of recent changes to risk taking or innovation or efficiency, but as the result of surging global commodity prices, driven in part by Russia’s war. For that reason, I am sympathetic to the argument to tax those profits fairly, but—[Interruption.]

Order. A bit of gentle banter is fine, but when it gets to the stage that nobody can hear what the Chancellor is saying, it is counterproductive. Quieter banter, please.

But, as ever, there is a sensible middle ground. We should not be ideological about this; we should be pragmatic. It is possible to both tax extraordinary profits fairly and incentivise investment. So, like previous Governments, including Conservative ones, we will introduce a temporary targeted energy profits levy— [Interruption.] But we have built into the new levy— [Interruption.] We have built into the new levy a new investment allowance similar to the super deduction, which means that companies will have a new and significant incentive to reinvest their profits.

The new levy will be charged on the profits of oil and gas companies at a rate of 25%. It will be temporary, and when oil and gas prices return to historically more normal levels, the levy will be phased out, with a sunset clause written into the legislation. And crucially, with our new investment allowance, we are nearly doubling the overall investment relief for oil and gas companies. That means that for every pound a company invests, it will get back 90% in tax relief. So the more a company invests, the less tax it will pay.

We understand that certain parts of the electricity generation sector are also making extraordinary profits. The reason for this is the way our market works. The price our electricity generators are paid is linked not to the costs they incur in providing that electricity but rather to the price of natural gas, which is extraordinarily high right now. Other countries such as France, Italy, Spain and Greece have already taken measures to correct this. As set out in the energy security strategy, we are consulting with the power generation sector and investors to drive forward energy market reforms and ensure that the price paid for electricity is more reflective of the costs of production.

These reforms will take time to implement, so in the meantime, we are urgently evaluating the scale of these extraordinary profits and the appropriate steps to take. So our energy profits levy will encourage investment, not deter it. It will raise around £5 billion of revenue over the next year so that we can help families with the cost of living, and it avoids having to increase our debt burden further. There is nothing noble in burdening future generations with ever more debt today because the politicians of the day were too weak to make the tough decisions.

I know the whole House will agree that we have a responsibility to help those who, through no fault of their own, are paying the highest price for the inflation we face. To help with the cost of living, we are going to provide significant targeted support to millions of the most vulnerable people in our society: those on the lowest incomes, pensioners and disabled people.

First, on people on the lowest incomes, over 8 million households already have incomes low enough for the state to be supporting their cost of living through the welfare system. They could be temporarily unemployed and looking for work; they could be unable to work because of long-term sickness or disability; or they could be on low pay and using benefits to top up their wages. Right now, they face incredibly difficult choices. I can announce today that we will send directly to around 8 million of the lowest-income households a one-off cost of living payment of £650. That support is worth over £5 billion and will give vulnerable people certainty that we are standing by them at this challenging time. The Department for Work and Pensions will make the payment in two lump sums, the first from July and the second in the autumn, with payments from Her Majesty’s Revenue and Customs for those on tax credits following shortly after. There is no need for people to fill out complicated forms or bureaucracy, as we will send the payments straight to their bank account.

Our policy will benefit over 8 million households in receipt of means-tested benefits from July. Uprating in that timeframe could only be done for those on universal credit, and our policy will provide a larger average payment this year of £650, whereas uprating the same benefits by 9% would be worth only £530 on average.

There are two further groups who will need extra targeted support. Many pensioners are disproportionately impacted by higher energy costs. They cannot always increase their income through work and, because they spend more time at home and are more vulnerable, they often need to keep the heating on for longer. We estimate that many people who are eligible for pension credit are not currently claiming it, which means many vulnerable pensioners will not be receiving means-tested benefits. I can announce today that, from the autumn, we will send over 8 million pensioner households that receive the winter fuel payment an extra one-off pensioner cost of living payment of £300.

Disabled people also face extra costs in their day-to-day lives; for example, they may have energy-intensive equipment around their home or workplace. To help the 6 million people who receive non-means-tested disability benefits, we will send them, from September, an extra one-off disability cost of living payment worth £150. Many disabled people will also receive the payment of £650 I have already announced, taking their total cost of living payment to £800.

I can reassure the House that next year, subject to the review by the Secretary of State for Work and Pensions, benefits will be uprated by this September’s consumer prices index, which on the current forecast is likely to be significantly higher than the forecast inflation rate for next year. Similarly, the triple lock will apply to the state pension.

Of course we recognise the risk that, with any policy, there may be small numbers of people who fall between the cracks. For example, it is not possible right now for the DWP or HMRC to identify people on housing benefit who are not also claiming other benefits. To support them and others, we will extend the household support fund delivered by local authorities by £0.5 billion from October.

This is a significant set of interventions to support the most vulnerable in our country. We will legislate to deliver this support on the same terms in every part of the United Kingdom, including Northern Ireland. Taken together, our direct cash payments will help one third of all UK households with cost of living support worth £9 billion.

We are meeting our responsibility to provide the most help to those on the lowest incomes. I believe that is fair, and I am confident that the House will agree, but many other families who do not require state support in normal times are also facing challenging times. Is it fair to leave them unsupported? The answer must surely be no.

Although it is impossible for the Government to solve every problem, we can and will ease the burden as we help the entire country through the worst of this crisis. We will provide more support with the rising cost of energy, and that support will be universal. Earlier this year, we announced £9 billion to help with the cost of energy, including a council tax rebate of £150 for tens of millions of households.

We planned to provide all households with £200 off their energy bills from October, with the cost repaid over the following five years. Since then, the outlook for energy prices has changed. I have heard people’s concerns about the impact of these repayments on future bills, so I have decided that the repayments will be cancelled. For the avoidance of doubt, this support is now unambiguously a grant. Furthermore, we have decided that the £200 of support for household energy bills will be doubled to £400 for everyone. We are on the side of hard-working families with £6 billion of financial support.

To summarise, our strategy is to combat and reduce inflation over time through independent monetary policy, fiscal responsibility and supply-side activism. We are raising emergency funds to help millions of the most vulnerable families who are struggling right now, and all households will benefit from £400 of universal support for energy bills, with not a penny to repay.

In total, the measures I have announced today provide support worth £15 billion. Combined with the plans we have already announced, we are supporting families with the cost of living through £37 billion or 1.5% of GDP. That is more than or similar to the support in countries such as France, Germany, Japan and Italy. I am proud to say that around three quarters of that total support will go to vulnerable households.

As a result of the measures announced today and the action we have already taken this year, the vast majority of households will receive £550, pensioners will receive £850 and almost all of the 8 million most vulnerable households in the country will, in total, receive support of £1,200.

Let me put that in context. The House will have noted the news from Ofgem earlier this week that it expects the energy price cap to rise to £2,800 in October. That implies an average increase in people’s bills this year of just under £1,200, which is the same amount as our policies will provide for the most vulnerable people this year.

I know there are other pressures. I am not trying to claim that we have solved the entire problem for everyone—no Government could—but I hope that when people hear of the significant steps we are taking, and the millions we are helping, they will feel some of the burden eased and some of the pressures lifted. They will know that this Government are standing by them.

Supporting people with the cost of living is only one part of our plan for a stronger economy—a plan that is: creating more jobs; cutting taxes on working people; reducing our borrowing and debt; driving businesses to invest and innovate more; unleashing a skills revolution; seizing the benefits of Brexit; and levelling-up growth in all parts of the United Kingdom. The British people can trust this Government because we have a plan for a stronger economy, and I commend it to this House.

I call the shadow Chancellor, Rachel Reeves.

After today’s announcement, let there be no doubt about who is winning the battle of ideas in Britain—it is the Labour party. Today, it feels as though the Chancellor has finally realised the problems the country is facing. We first called for a windfall tax on oil and gas producers nearly five months ago, to help struggling families and pensioners. Today, he has announced that policy but he dare not say the words; it is a policy that dare not speak its name for this Chancellor. It was also Labour that first highlighted the unfairness of this Government’s buy now, pay later compulsory loan scheme. It should not have taken a rocket scientist to work out that this would not cut it, and we pointed that out at the time, but that is the mark of this Klarna Chancellor: announce now, ditch later. Here he is, once again, the Treasury’s one-man rebuttal unit, the Chancellor himself.

For months, it has been clear that more was necessary to help people bring their bills down, so what took this Government so long? Every day that they have refused to act, we have had £53 million added to Britain’s household bills during this cost of living crisis. This Government’s dither and delay has cost our country dearly. Labour welcomes the fact that the Government are finally acting on our calls to introduce a windfall tax, and it is good to see the SNP U-turning today and saying that they, too, are in favour of a windfall tax on oil and gas profits—well done to the SNP.

It was a painful journey to get the Government to this point. First, Conservative Ministers said that oil and gas producers were “struggling”—that was the Education Secretary, I think—but then the BP chief executive said that the energy crisis was a “cash machine” for his business, so the Government moved to the second defence. Ministers claimed that a windfall tax would put off vital investments, but the industry said that it would not even change its plans. Then the Government said that a windfall tax would be “un-Conservative”. It is so un-Conservative that Margaret Thatcher, George Osborne and now this Government are doing exactly that. Finally, the Chancellor said that it would be “silly” to offer help now, given that he did not know the full scale of the challenge. What nonsense! It should not take half a million pounds of publicly funded focus groups for the Chancellor to realise that helping families and pensioners is exactly the right thing to do.

Every day for five months, the Prime Minister sent Conservative MPs out to attack the windfall tax and yet defend an increase in taxes on working people. He has made them vote against the windfall tax not once, not twice, but three times. For months, he has sent his MPs to defend the litany of rule-breaking in No. 10 Downing Street that was set out in the Sue Gray report yesterday. There is a lesson here for Conservative MPs: you cannot believe a word this Prime Minister says, and as long as he is in office, he will continue making fools out of each and every one of you. If they keep him there, that is their choice. The problem is that you cannot fake fairness—you either believe in it or you don’t.

Labour called for a windfall tax because it is the right thing to do. The Conservatives are bringing it in because they needed a new headline. We see that, too, from all the other things that the Chancellor did not address today: the non-doms keeping their tax privileges while the Government increase taxes on working people; young working people paying more, but those who earn money buying and selling stocks and shares not paying a penny more; contracts handed out to Conservative friends and donors while British businesses miss out; global tech giants making billions in profits while smaller businesses and the energy-intensive industries struggle with higher bills and higher taxes from the Conservative party; and £11.8 billion lost in fraud because of a total lack of respect for taxpayers’ money. That is why we should have had an emergency Budget today that spikes the hike in national insurance, cuts business rates for high-street and small businesses, provides help for energy-intensive firms and ensures that every pound of taxpayers’ money is spent wisely.

We will look closely at the detail of today’s announcements. Of course, most of them seem to be written by us, but so far we have seen nothing to suggest that this Conservative Government have the ideas or the energy to tackle the challenges we face as a country. A Labour Government would have addressed the underlying weaknesses in our economy, so that we can stop this spiral of inflation, lift wages and provide greater security for families and for our country. The truth is that the Conservatives are running our economy, and people’s living standards, into the ground. We are forecast to have the slowest growth and the highest inflation in the G7. This Government have weakened the foundations of our economy, leaving us exposed to shocks as we lurch from crisis to crisis, and still they refuse to come forward with a real plan to fix our broken system and provide the security we need to face the future with confidence. That means boosting our energy security too. We need to do much more to reduce our reliance on imported oil and gas. That is why Labour’s energy security plan includes a programme of home insulation, to reduce bills not just for one year, but for years to come and to get us all the way to net zero. It is why we have urged the Government to double onshore wind capacity and to end the delay on nuclear power. [Interruption.] And while we are at it, why did this Tory Government get rid of our gas storage—[Interruption.]

Order. It is important that we also hear the shadow Chancellor.

While we are at it, why did this Tory Government get rid of our gas storage, which would have left us better protected from wild fluctuations in prices? When will this Government provide the strong leadership that this country needs?

There are a number of questions for the Chancellor about his announcement today. How many people are still waiting for the support they were promised in March? A third of his constituents are still waiting for their council tax discounts. Are households still being asked to pay the supplier of last resort costs for those energy suppliers that have gone bust as a result of a decade of failed energy market regulation? How is this package being funded, outside of the proceeds of a windfall tax? If someone has more than one home, do they get multiple discounts on their energy bills? I know that the Chancellor has adopted two of our ideas today, but may I ask why he has not adopted a third: a cut in VAT on energy bills? It was once touted as the big Brexit bonus, but he has ditched that too. This is a discredited, chaotic and rudderless Conservative Government, whose policies rarely last more than a few months. We pushed for a windfall tax and they adopted it. We said the buy now, pay later scheme was wrong and now they have ditched it. This Government are out of ideas, out of touch and out of time. When it comes to the big issues facing this country, the position is now clear: we lead, they follow. [Hon. Members: “More!”]

Order. We are not going any further unless you are quiet. I call the Chairman of the Select Committee, Mel Stride. [Interruption.] I beg your pardon. It would be best if I allowed the Chancellor first to reply to the shadow Chancellor. I am not trying to change the rules; I am just trying to go a bit faster. I call the Chancellor of the Exchequer.

I thank the hon. Member for Leeds West (Rachel Reeves) for her contribution, albeit her response was based on a fundamental misunderstanding of why now is the right time to act. Since February and March, three significant things have changed: the situation in Ukraine has altered considerably from what was first envisaged; inflation is now tacking considerably higher than was previously expected; and finally, and most importantly, we now have concrete information on the autumn and winter energy price cap. With that information, we were better able to design and to scale our policies. That is why, with time and thought, our energy profits levy has a very generous investment allowance built into it—not something proposed in the Labour party’s blunt instrument.

Because we were patient, we have been able to scale our support to the problem, which means that our proposals are in fact more generous than those offered by the Labour party. Because Labour Members rushed it, they got their sums wrong. But we all make mistakes, and being able to change course is not a weakness: it is a strength. I will not criticise the Labour party for getting it wrong, just so long as Labour can acknowledge that with this package we have got it right.

Let me address some of the specific points. I think the hon. Lady talked about energy security and, somewhat bizarrely, reflected on the lack of investment in nuclear capacity. Well, this is the Government who are correcting the mistakes of the past.

The hon. Lady asked about energy efficiency. This is the Government who are investing £6 billion to improve energy efficiency.

The hon. Lady asked about business rates. This is the Government who are delivering a 50% discount in business rates for our high streets next year.

The hon. Lady talked about growth. One of the best ways to drive growth is to drive up business investment. That is something the Labour party will never understand.

The hon. Lady also asked about VAT. This goes to the heart of the issue. VAT is worth, on average, about £140 of support; our policy, universally—to all households in this country—is worth £400. That is the reason not to do VAT. What we are doing is far more generous.

My final point—I know we are pressed for time, Madam Deputy Speaker—is about ideas. For our constituents, there are only good ideas and bad ideas, and whether we can do anything about them. This Government can, because we are always on the side of the British people. This Government have been faced with challenges unlike any other and at every step we have achieved things that the Labour party said were not possible. We averted the mass unemployment crisis that Labour predicted because of our furlough interventions. We led the country out of covid with a vaccine programme that Labour would have left us unable to deliver. Each time I am at this Dispatch Box opposite the hon. Lady, I find myself thinking the same thing: the public can see through it. They know the difference between a party playing politics and a Government trying to help. [Hon. Members: “Hear, hear!”]

Order. That is enough. Now we will hear from the Chairman of the Select Committee, Mel Stride.

I broadly commend the announcement. My right hon. Friend has made a significant intervention to channel billions of pounds in a targeted series of transfer payments to those who most need it, but, as he will know, similar approaches were taken in the pandemic and there were many who fell through the gaps and missed out on support.

I note the additional £0.5 billion increase in the household support fund, which is welcome. Will my right hon. Friend set out to the House how he arrived at that figure and why he feels it will be adequate for the demand?

On the issue of inflation that my right hon. Friend raised, these transfer payments will stimulate the economy—granted, they will come with some tax increases as well—but will he share with the House his assessment of the inflationary impact of the announcement he has just made?

Finally, will my right hon. Friend appear before the Treasury Select Committee immediately after recess so that we can look at these matters in greater detail?

I thank my right hon. Friend for his questions and for his thoughtful advice on how best the Government should respond to the current situation. We put extra support into the household support fund because, very specifically, the one group of those on means-tested benefits to whom we cannot deliver money automatically is those who receive only housing benefit, because that is administered by local authorities. That is the main group that needs that specific help, but of course there may well be others, which is why the fund is there.

On the inflationary impact, I believe it will be manageable, but my right hon. Friend is right to highlight it. That impact is why it is important that the support we provide is targeted where it can make the most difference, and that it is temporary and timely, and gets help to where it is required. That is the right approach: being fiscally responsible is going to help us to combat inflation in the long run.

I call the SNP spokesman, Kirsty Blackman.

It is quite amusing to hear the Chancellor talk about this announcement being timely. I mean, it is timely: it just happens to have happened in the week of the Sue Gray report. It just happens that that report came out yesterday and the Chancellor has suddenly realised today that people are really struggling. He has suddenly realised that he needs to announce something.

At the spring statement, when the Chancellor announced the energy loan, he stood up and said, “Look at these amazing things that I am announcing.” He genuinely seemed to believe at that time that that was the best this Government could do. Now, he has changed his mind. He has listened to the calls of the Opposition and of the people up and down these islands who are struggling, in many cases more than they have ever struggled before.

I do not understand why the Chancellor has announced only a £15 billion package. He has £28 billion of fiscal headroom in public sector net debt and £32 billion of fiscal headroom in balancing the current budget—those are the Office for Budget Responsibility’s figures from March—yet he is refusing to spend that money now in the timely and targeted way that is needed for people now.

I am glad that the Chancellor announced money for the poorest households and that it has been targeted in that way, but it is not enough. What he has announced fails to uprate benefits; fails to account for the fact that the energy price cap that is coming in October will still be in place next year; and fails to ensure that benefits keep pace with inflation.

I have to laugh at the Chancellor’s comments about inflation. Brexit has increased food prices by 6%. Brexit has done that. People who are struggling to meet the most basic costs—the majority of their costs are for energy and food—have been hit incredibly hard by Brexit. The poorest 10% of households are seeing a massive inflationary increase in comparison to the richest 10% of households, because of the percentage of their budget that is spent on energy and food. The Chancellor needs to uplift benefits as well as making payments.

It was pretty cheeky of the Chancellor to choose to include the £150 council tax payment in all the figures he read out. That went only to people who live in homes in bands A to D. It certainly did not go to all pensioners and certainly cannot be included in the money that is going to all pensioners. It cannot be included in the money that is going to all universal credit claimants, and it cannot be included in the money that is going to all disabled people. It cannot be included in the cost of this support package because it is absolutely not universal. On that point, the payment that we made in Scotland went to a higher percentage of households than the payment made in England.

This package does not go far enough. We are going to see an energy price increase of more than £1,000 for all households because of the increase in the energy price cap, yet the Chancellor is providing only £300 extra for pensioners. That will not even touch that £1,000 increase. He is only including these things. The uplift should have been 9%, to match inflation, and there should have been a further £25 uplift to universal credit and a further £25 uplift to legacy benefits. Lastly, he has failed in the uplift for disabled people, who face the very highest cost because of the increase in energy costs and in the cost of, for example, their diets.

I am glad that the Chancellor has put in place the windfall tax. I am very disappointed that it covers only oil and gas companies. It should have gone much wider. We have been calling for this since 2020, with Kate Forbes and Ben Macpherson. [Interruption.] The Labour party failed to support our amendment on this last week, so Labour Members are a bit cheeky as well in suggesting that we have not moved on this.

I would like the Chancellor to go further, to make a difference and to actually care about the poorest people in our society.

I know that, for some people, it will never be enough. That is why the SNP’s plans would leave Scotland with, I think, a 20% budget deficit and bankrupt the country. That is not something that we will ever do to the people of Scotland or the United Kingdom.

The hon Member’s point on food prices was surprising and slightly puzzling, given I have just returned from a meeting of Finance Ministers from around the world where everyone was talking about increasing food prices. As far as I know, they did not all leave the European Union, but I will leave that to her.

The hon. Member talked about benefits uprating. Perhaps she did not understand exactly what we were announcing. What we are doing for those on means-tested benefits is more generous than uprating. On average, uprating would be worth just over £500, whereas the one-off payment is worth £650.

The hon. Member also talked about timing. She mentioned many things that have happened this week. The other thing that happened this week is that we heard from Ofgem, and we got more certainty on what the price cap will be in autumn. That is the single most important factor in trying to size the support that we are providing to people, because it is energy costs that are the biggest driver of the inflation that we seeing now.

When the Chancellor approved £150 billion of extra cash to be printed in November 2020 and gave a full guarantee against losses on the bonds, did he think that there could be any inflationary and public spending risk from that? I fully support giving back the huge windfall taxes that he is already collecting on energy, the VAT on fuel, the rip-off at the pumps and the much-enhanced profits tax coming from North sea oil and gas. That should be given back because people need some relief. On inflation, though, what did he think when he printed the money?

I am grateful to my right hon. Friend for his question. He and I have talked about inflation for quite a while. He will know that I have long been concerned about the potential of rising inflation and interest rates. It is something that he and I discussed very early in my time in this job. That is why, from the beginning, I have been careful to protect our public finances against the costs of rising inflation and interest rates. I am glad that we took those decisions. Now, because of that, we are in a position to act and to support people.

I have a specific question about the household support fund. The Chancellor says—I think he is saying this—that, wherever people live, if they are in the same circumstances, they will get the same help from this fund. In other words, local authorities will have no control over how much money is spent from the fund. Will he therefore guarantee that councils will get pound for pound from the Government every pound they have to spend for the people who need it?

No, that is not how the household support fund works. It has always been the request of colleagues in this House and indeed councils for that to be discretionary. What we generally tend to do is provide guidance on the types of people that we expect to have support, but leave the ultimate decision to those in local authorities. In this instance, for example, the particular priority ought to be those who receive only housing benefit. The fund is more than sized to deal not just with those, but with others. Ultimately, though, we leave the discretion to local authorities, with guidance provided by my colleagues at the Departments for Work and Pensions and for Levelling Up, Housing and Communities.

May I give the Chancellor an unreserved welcome for the help for ordinary citizens? I think now, cumulatively, it is worth north of £35 billion all told. However, may I raise two concerns? First, he talked about the risk of excessive fiscal stimulus. How does he reconcile that with the fact that the latest figures show that we are taking more money out of the economy than we ever have in history? Secondly, on the windfall tax, it will raise a small amount of money. Stability of tax and low tax both encourage investment and growth. Is there not a risk that the Exchequer will lose more in growth than it will gain in the windfall tax?

I thank my right hon. Friend for his question. With regard to the figures on borrowing and stimulus, we are still running a relatively significant budget deficit this year—forecast to be 4% back in spring—so I would not regard that as a particularly tight policy on the fiscal side, and we will add further support today. With regard to tax, it is important to continue to support investment. The way we have designed the energy profits levy, with a doubling of the investment relief, will mean that companies still have a very strong incentive to invest in the North sea.

People on pre-payment meters, many of whom are on the lowest incomes, are still paying more for their energy than people who pay by direct debit, and they are increasingly likely to self-disconnect to turn off the light and the warmth. When will the Government act to end this price discrimination against some of the least well-off members of our society?

I know that my right hon. Friend the Energy Secretary is engaged with all the companies on how best to support people through this. With regard to the support that we have announced today, about 7% of households are on non-smart pre-payment meters and we want to make sure that we get their support to them. That has been taken into account and will be delivered through vouchers. The remaining pre-payment meters are smart, and the credit can be put straight on those meters so those people benefit.

Can my right hon. Friend confirm that, under Labour’s plans, my most vulnerable constituents in Swanley, Westerham and elsewhere will receive £600, while under our plans they will receive £1,200?

My hon. Friend is right. The combination of all the support that we have announced means that almost everybody on means-tested benefits should be in receipt of £1,200 of direct support from the Government. As she says, that is double the support offered by the Labour party.

The word that occurs to me today is “Finally”. After months of proud families in this country, who have never needed help before, crying out for help from the Chancellor, pensioners sitting in cold houses in the winter because they could not afford to heat them, and families unable to put food on the table, this has come as too little, too late. Liberal Democrats were calling on the Chancellor to bring in a windfall tax on the excess profits of energy companies in October, when it could have made a difference in the winter. Instead, the Chancellor was hiking up taxes and adding to the national insurance burden of those already hardest hit. What I want to say to him today is this: will he listen next time, when from those on the Opposition Benches he gets an idea or suggestion that would help the people of this country, rather than hike up their taxes?

Seventy per cent. of those in work will pay less tax this year than they did last year because of the changes that we have made. As I have said, now is the time to act because we have more certainty over what the price cap in the autumn will be. We are two thirds of the way through the observation window. Ofgem has given us a sense, which means that we can scale the support appropriately.

I warmly welcome my right hon. Friend’s statement. The shadow Chancellor made a very fair point: how are we going to fund this £15 billion? Is it not also fair to ask, on the basis that the windfall tax would raise about £3 billion by Labour’s calculations: how will Labour fund all the spending plans that it has announced today and on previous occasions, and the tax reductions that it has announced today and on previous occasions?

My hon. Friend makes an excellent point. On the last count, we have had, I think, £100 billion of spending commitments or tax reductions from the Labour party. Less than a tenth of that has been funded, despite the shadow Chancellor saying that she is committed to fiscal responsibility. It is the same old story with Labour. Ultimately, they always run out of other people’s money.

I congratulate the Chancellor on pinching some of our ideas. I really encourage him to look at the 17.5% VAT as well. One of my constituents sent me a copy of bills: January 2021, electricity £10,731.70; January 2022, £48,694.56. That is a 353.745% increase. How will the Chancellor’s statement today and his intervention help the businesses in my constituency because he seems to have left them out?

With regard to businesses, we have the energy-intensive industries support scheme, which the Business Secretary is consulting on extending and improving the generosity of, to help the most energy-intensive industries in the country.

As the Chancellor knows, I have spoken in this House and privately to him against Labour’s proposals for a windfall tax—[Interruption.] I was waiting for the heckle. In my opinion, which I believe the Chancellor shares, they were entirely too blunt an instrument and frankly punitive for the sake of being punitive. I welcome his support for those most affected by the rising costs, his more targeted and specific approach to excess profits in the oil and gas industry and the relief on investment, which is already extensive, as he knows.

I have two questions. Can my right hon. Friend provide assurance that that charge will be applied to excess profits and that those will be distinguished from the increase in profits that would be expected in the natural cycle since the downturn of the past 12 years? Will he also commit to continuing the constructive dialogue with the industry that has been evident from this Government, in the interests of energy security and the transition to net zero?

My hon. Friend is an excellent champion of the industry, and he is right to be so, because it is an important industry for the success of our future economy. It employs hundreds of thousands of people and it invests an enormous amount. We want to see that industry succeed and I know that, with his support and this Government’s, we will make sure that that happens.

This statement may have put out the fires, or some of the fires, on the Back Benches behind the Chancellor, but it does not provide the comprehensive support and plan that these islands require. In a 22-minute statement, which began with an explanation of our rate of inflation, he forgot—or I presume he forgot—to mention Brexit, which has directly caused a 6% increase in food prices relative to international food prices and is the reason the International Monetary Fund expects UK inflation to remain far higher than that of the rest of the G7 for a prolonged period. We have heard the wholly inadequate firefighting today, but what is his plan for the medium to long term?

As I spelled out, over the long term, through responsible fiscal policy, independent monetary policy and supply-side activism we will combat and reduce inflation. We are making progress on all three fronts.

I warmly welcome the Chancellor’s statement. He said that into the autumn he will think about tax cuts, which would be very welcome. Will he think about raising the income tax personal allowance for millions of hard-working families? It has been kept the same for the last two tax years, but in lifting it we would start to see those families able to take more of their income home with them, which is very much needed.

My hon. Friend is right that we want to ensure that our constituents keep more of their hard-earned money. That is why in July we will raise the national insurance primary threshold to equalise it with the income tax threshold—a tax cut for 30 million people, worth around £330 each.

The Chancellor says he cannot solve every problem, but there is one problem he could solve that would not cost him a penny, but would save millions of people billions of pounds. One in 10 households say it is loan repayments that are causing them destitution, with an average monthly repayment to find of around £370. In the cost of living crisis, it is the legal loan sharks and consumer credit companies that have profited from the delay in help that we have seen and the lack of regulation of their charges. This is not just “buy now, pay later”—it is all of them. When will the Chancellor follow the lead of other countries, recognise how our constituents are being ripped off by those companies, and introduce a cap on the costs of all credit?

My hon. Friend the Economic Secretary to the Treasury is in regular dialogue with the Financial Conduct Authority to ensure that the industry is properly regulated. Last year, we also introduced the breathing space programme, for which he deserves enormous praise and which we continue to believe will help people. It provides a space where all statutory debt repayments are paused to allow families time to work through them, with the benefits that that brings.

What difference in monetary policy has protected Japan and Switzerland from the levels of inflation that we are encountering here, in the United States and in the rest of Europe?

Japan, as my right hon. Friend will appreciate, is a very particular case, but even Japan is experiencing its highest relative inflation rate in many years. For Switzerland, there are a couple of reasons. The first is a particularly strong Swiss franc, which happens at times like this. The second is a different mix of energy, which I believe from memory is provided overwhelmingly by hydro and nuclear. That is a completely different energy mix, which means that Switzerland suffers less from the shock we are experiencing.

Almost five months after Labour called for a windfall tax on oil and gas producers to help seriously struggling Brits, I am glad that this out-of-touch, out-of-ideas Government have had that damascene conversion and performed today’s screeching U-turn. However, it is already too late for many, including many of my constituents, who have been forced into destitution and had to choose between eating and heating. Talking of U-turns, will the Chancellor today perform another one by scrapping the national insurance tax hike? It is seriously hurting working people, and we are the only G7 country to be taxing working people so much that we now have the highest tax burden since the 1960s.

Some 70% of people in work—including, I would imagine, the hon. Gentleman’s constituents—will pay less tax this year than last year as a result of the increase in the national insurance primary threshold. That is delivering a tax cut to the vast majority of people, but it is right that those with broader shoulders help to contribute to funding the NHS properly, as it needs.

There were two tasks for the Chancellor today. The first was to provide support for the poorest households, who are facing a period of extreme hardship, and on that front I think he has made all the right judgments. Direct payments are simple, easy to administer and non-recurring; the experience of doing something not dissimilar in the United States was generally positive. The second task, however, is to inject some confidence into the economy, which is facing a recession or a long period of stagnation. On that front, does he agree that we need a steady hand from the Bank of England, so that there is no further quantitative easing, with its inflationary pressures? We urgently need the supply-side reforms that he alluded to, we need delivery of the energy plan he and the Prime Minister have set out and we need to think about the tax burden in the years ahead. The Chancellor’s announcement today is heavily redistributive; that is a good thing for hard-working families and the vulnerable, but it is being paid for by higher taxes on higher earners and businesses, and in the long term we need to address that.

I agree wholeheartedly with my right hon. Friend. He makes excellent points, and he can expect me and this Government to deliver on all the things he thinks are important.

I welcome the recognition in the Chancellor’s statement that benefit rates have fallen too low in real terms, given current inflation. Does he agree that it is time now to rethink the mechanism through which benefits are uprated—he has referred to the IT problems that have constrained him—and the level at which benefits are set?

I am sure my right hon. Friend the Work and Pensions Secretary is the best person to talk about the implementation of benefits, but the right hon. Gentleman will know that next year, benefits will most likely be uprated by September’s consumer prices index, subject to review. That will mean a very significant increase in benefits next year, in excess of the rate of inflation, which will be very positive for those in receipt of them.

Does my right hon. Friend agree that, in addition to the vital, significant and welcome help with the cost of living, it is also important to continue to invest and create jobs in the economy? Will he join me in welcoming the £80 million investment made by the Treasury and Her Majesty’s Revenue and Customs in the White Cliffs HMRC border facility, which will bring 400 jobs to Dover and Deal and help to secure customs and tax revenue, border control standards and the UK tax base?

I know that is something my hon. Friend rightly cares passionately about for her community. She is right that the best way of helping people with the cost of living—indeed, the best way to help them to provide a better life for their families—is through well-paid work. That is why we are so focused on helping people into work and providing jobs. It is worth bearing in mind that someone moving off universal credit and into work is £6,000 a year better off. That is why we are wholeheartedly focused on moving people into work, and my right hon. Friend the Work and Pensions Secretary deserves enormous credit for that.

If the excess profits of the energy companies persist beyond this year, will the windfall tax persist? Will the Chancellor explain how the sunset clause works? Will he also explain why, when his super-deduction of 130% of investment has so far failed to spark the kind of investment he thought it would, he thinks a 90% investment allowance for the oil and gas companies will work?

We will put a backstop sunset clause in the legislation with the energy profits levy. It will remain in place until prices return to a more normal level. In the past, that was specified specifically. We will take the time to get that right, but it will not be automatic in 12 months. It will depend on when prices return to a more normal level.

Over and above the up to 30 hours of free childcare for three and four-year-olds and 15 hours for disadvantaged two-year-olds, there is also tax-free childcare that could help to alleviate the pressure of the cost of living for many families in Eddisbury and across the country, but only one in five eligible families take up the scheme. That has led to an underspend of about £2.5 billion over the past four years. What is my right hon. Friend going to do to help those families get the support they are entitled to to help them through this difficult time?

My hon. Friend is rightly passionate about that subject, which he knows a lot about. Both the Education Secretary and the Exchequer Secretary are working hard to combat the low take-up of tax-free childcare. It is a generous benefit worth up to £2,000 a year and we want to make sure that everyone who can benefit from it does so.

This is a significant intervention in the economy—there is absolutely no doubt about that—and the Chancellor has said it is for the whole of the UK, which is one of the reasons why we celebrate being Unionists. The Road Haulage Association has indicated that the cost of living is higher in Northern Ireland by 34%. With that in mind, can the Chancellor confirm that the measures announced today apply to Northern Ireland without exception and whether the EU will have to be consulted about any of the measures before they apply?

As I said, when it comes to all the direct payments through the welfare system, we will take legislative powers to deliver them directly in Northern Ireland, where we believe we have the operational capacity to do so. As for the support for energy bills in the autumn, we are open to exploring how best to deliver that support to those in Northern Ireland. Ordinarily it would be Barnetted—it is worth £165 million—because, as the hon. Gentleman will know, the energy market is separate to that in the rest of Great Britain, but if there is a way for us to deliver that support directly, we are open to doing so. We just need to see whether there is a mechanism to do so.

The London Borough of Bromley has the highest percentage of pensioner households in the whole of Greater London, and my right hon. Friend’s well-targeted initiative will be very much welcomed by my constituents. Equally, of course, in the longer term, inflation is a threat to their pensions and fixed incomes. Will my right hon. Friend assure me that as well as dealing with the immediate pressures now, we will pursue a policy of non-inflationary growth? Above all, that must surely come from market and other reforms to improve our comparatively low level of productivity. Will he make that a priority going forward?

My hon. Friend is absolutely right and I know that he is a champion for pensioners in his constituency. I hope that he will be pleased by today’s news that they will receive an extra £300 this winter to help get them through. His point about the long run is right. My belief is that if we can get businesses to invest more, train more and innovate more, spurred on by tax reductions and reforms this autumn, we will be able to drive up our growth and productivity.

I welcome the fact that the Chancellor has accepted many of Labour’s calls, but my constituent who is on £1,300 take-home pay and pays a rent of £800, council tax of £100, debt repayments of £100 a month, travel costs of £100 a month and fuel costs of £200 a month is left with nothing to eat with. He is ineligible for universal credit and because he lives in a block of rented flats where the landlord redistributes the fuel, he will also be ineligible for the fuel rebate. Will the Chancellor confirm to councils that their discretionary money must prioritise people who live in park homes or who receive their fuel from their landlords, so that they can get support as well, because they are currently excluded?

I am very happy to take away that suggestion when we design the guidance for the discretionary fund.

It will come as no surprise to the House that I have had my concerns about the implementation of a windfall tax on the oil and gas industry, so I thank the Chancellor for his engagement with me and colleagues, including my hon. Friend the Member for Banff and Buchan (David Duguid), and for resisting the ideologically driven smash-and-grab raid proposed by Labour. I also thank him for doubling the investment allowance to encourage people to invest in the North sea. There is still worry in the industry and in my constituency, so will the Chancellor commit to come to the north-east of Scotland to meet me and industry leaders to ensure that we retain the higher skill, high-wage jobs in my part of the world and ensure that we invest in an industry that is driving us towards net zero and making us more energy independent.

My hon. Friend is a champion for the industry and is right to be so. I am happy to come and meet him and representatives from the sector, because I share his view that the industry is an important part of our economy and of our future. As he said, it helps us transition to net zero and improve our energy supply.

The SNP supports action—at last—on a windfall tax. As my hon. Friend the Member for Aberdeen North (Kirsty Blackman) pointed out, we first called for that in 2020. Energy companies, which are disproportionately based in Scotland, are not the only businesses to make excess profits during the pandemic and the crisis period. Did the Chancellor not give any consideration to expanding the tax to other companies that are unfairly benefiting from significantly higher business, such as Serco or Amazon, to make sure that Scotland does not carry a disproportionate burden of funding a UK-wide response?

No, we are not giving consideration to that. As I said, we are giving consideration to excess energy profits being made in other parts of the sector, on the generation side. As I said, we will examine the scale of that challenge and the right steps to address it.

I warn my right hon. Friend that throwing red meat to socialists by raising taxes on businesses and telling them where to invest their money is not the Conservative way of encouraging those who create our prosperity and jobs to do just that. Does he agree that by setting this bar we are in danger, were we ever to lose power, of allowing the socialists to raise it, which they would do with relish again, again, and again?

I thank my hon. Friend. What I would say to him is that I believe that a pragmatic and compassionate Conservative Government would act to provide support to the most vulnerable at a time of great need and that a fiscally responsible Conservative Government would look to try to fund as much of that as possible in as fair a way as possible.

Recent research by 38 Degrees has shown that in Feltham and Heston, 68% of the population are experiencing more expensive energy bills, 78% are experiencing more expensive groceries and 25% have seen household incomes cut by the cut to universal credit. That has had a massive impact on the wellbeing of families and their confidence in the future, and in being able to feed and clothe themselves and pay their rent. Landlords in blocks such as Trinity Square in my constituency have massively increased tenants’ energy bills. Can I take it from the Chancellor’s answer to my hon. Friend the Member for Brighton, Kemptown (Lloyd Russell-Moyle) that he will ensure that landlords and housing associations pass on the benefits to the hard-working families that urgently need the support?

I am fairly certain that my colleagues the Energy Secretary and Housing Secretary previously engaged with landlords’ associations to ensure that they passed on the benefit and I am happy to talk to them to make sure that they do the same thing again.

I welcome the measures, although I sense that my right hon. Friend will need to keep the situation under constant review with further measures possibly required, such as a social tariff and support for those on prepayment meters, as well as initiatives to trigger significant investment in energy efficiency. Transitioning and renewable energy in the North sea is bringing good long-term jobs to coastal communities such as Waveney. I urge him to work with energy companies, as he has indicated that he will, to ensure that their investment is maximised and not undermined.

I am happy to give my hon. Friend that assurance and to work with him and the industry, because we want to create a pro-investment environment. On energy efficiency, we are investing £6 billion over the course of this Parliament to improve the energy efficiency of public sector buildings and individual people’s homes.

In his statement, the Chancellor rightly raised his concern, as we all have in this House, about the number of people eligible for pension credit who are not claiming it. The latest figures suggest that £1.5 billion in pension credit is unclaimed. That is not something we should have going forward, so will he indicate whether the Government will now look at a proper take-up strategy for pension credit, or is the grant that he has mentioned today perhaps the way forward?

I know that my right hon. Friend the Secretary of State for Work and Pensions is constantly ensuring that those entitled to those benefits do get them, and I am sure she will keep everything under review.

There is ample evidence that the big retailers, which dominate the nation’s forecourts, have not passed on the cut in fuel duty, and we know that from the Platts price. I urge the Chancellor to take action to put pressure on these companies, but given our experience in this matter, does that not rather underline the fact that we Conservatives understand that there are enormous difficulties in interfering in the marketplace and that the best way to help people is an overall reduction in the tax burden?

While I broadly agree with my right hon. Friend that that is the best way to help people over time, in a particular circumstance such as this, and given the types of people we are trying to help, I believe that direct cash transfers are the right way, rather than going through the tax system. I have talked to my right hon. Friend the Energy Secretary about the issue that my right hon. Friend raises. He is right to raise it, and I know that the Energy Secretary is focused on ensuring that the fuel duty cut is passed on.

Does the Chancellor now admit that he got it wrong in excluding disabled people from the warm home discount, which excluded 210,000 people who desperately needed help? Can I have confirmation that this announcement means that those 210,000 people are now eligible?

The warm home discount is an existing scheme that covers only 3 million households. It is also funded by other billpayers. What we are doing today is setting out Exchequer-funded support to all those on means-tested benefits, so that anyone on those benefits will benefit from the £650. Additionally, those in receipt of any other disability benefits, which are non-means-tested, will receive £150.

I thank the Chancellor for this package. Clearly he is a Chancellor who listens and a Chancellor who does. Will he confirm that this Government will continue to focus on energy sector reform, so that we can meaningfully reduce the impact of energy costs on household bills in Meriden and across the country in the medium and long term?

My hon. Friend is absolutely right, and that is why the Business Secretary and the Prime Minister announced the plan to reform the energy market so that we can reduce those bills over time and also double down on our initiatives to improve the energy efficiency of people’s homes, which can save them £200 or £300 relatively quickly.

The windfall tax amounts to just £5 billion, but it could have been well over double that and still left North sea oil and gas giants with the same profit levels they have had in recent years, before they benefited from this price spike. Surely the Chancellor should be doing everything he can to help people who are struggling, so why is he still letting oil and gas companies keep billions in undeserved profits?

I think that the official Labour party view is that the windfall tax would raise £2 billion. The way we have structured ours means it will in fact raise £5 billion, which is a significant amount of revenue that will help fund the things we have announced today.

I particularly welcome the support that my right hon. Friend is giving to those most impacted by this surge in inflation. As part of his excellent statement, he highlighted supply-side reforms that will be most important in the medium term but will take some time to come through. Could he perhaps give a little more information about those supply-side reforms that he is intending?

My hon. Friend speaks with experience on this matter, given his previous roles.

I will give a couple of examples. One we have touched on, which is energy supply and making sure that we can improve it, but there is also the labour market, which we know is tight. That is why it is important that we move people off welfare and into work and reform high-skill migration. Beyond that, we will go after all opportunities across all sectors where we can deregulate and improve our productive capacity.

On the Chancellor’s watch, we have had 15 tax rises, and this year the UK is the only G7 country to be raising taxes on working people. He has known for months that our constituents are going hungry, sitting in the cold, worried sick about their bills and facing the biggest fall in their living standards since the 1950s. Why did it take the Prime Minister’s boozy lawbreaking being all over the news for him to finally impose a windfall tax on the bumper profits of energy companies?

Well, we did act, and that is why there is already £21 billion of support to help people with the cost of living this year. We are adding £15 billion to that today, after having more certainty about what energy bills will be in the autumn, and that is why we have acted now.

The consumer champion and money saving expert Martin Lewis met the Chancellor on Monday, and he has published a series of requests that he was making upon the Chancellor. He has since stated:

“Wow just reading this back, I think he was listening!”

Will my right hon. Friend continue to meet consumer champions and respected individuals, such as Martin Lewis, who can provide independent assessments of policymaking and judgments on behalf of some of the most vulnerable in society? Does he further recognise that while we have two countries at war in Europe that are either large food producers or large energy providers, there will always be a time when we will not be able to answer everyone’s demands?

My right hon. Friend makes some excellent points, particularly his macroeconomic point about the geopolitics that we are experiencing at the moment. I am happy to give him my assurance that I will continue to engage with consumer champions such as Martin Lewis. He has provided thoughtful and interesting suggestions, and I hope he will see that many of those have been met in the package we have announced today.

Why has the Chancellor not provided additional targeted support to the half a million communal heating system customers who are not protected by the energy price cap?

We have not changed the structure of how the price cap works—it covers what it covers. But what we have done is provide discretionary funding—already half a billion pounds this year between spring and autumn, and now an additional half a billion pounds from October through to next spring—to pick up all those who might be in particular circumstances that need additional assistance.

May I welcome the Chancellor’s economic package? It is thoughtful, innovative and incredibly generous—much more so than some of the ideas that some are saying he has taken from the Opposition.

Last week, I met our fantastic citizens advice team, who work so hard locally. They had a number of measures, and he has delivered on them all. There is one remaining: they were concerned that one-off payments, generous as they are, can sometimes be difficult for people with particular challenges to manage. Will he look at that in the roll-out and ensure that we can help the people who perhaps need it the most?

I thank my hon. Friend for his support and join him in paying tribute to our fantastic citizens advice bureaux for the fantastic work they do. He makes a good point, which is one reason why the payment will be staggered into two tranches. It will not come all in one go: the first tranche will come in July and the second later in the autumn. That will help to address the issue that he raised.

Energy-intensive businesses and sectors such as automotive manufacturing are facing huge challenges due to soaring energy prices. Companies such as Vauxhall in Luton South need some specific support to keep plants running efficiently and to keep people in skilled jobs. Can I hear from the Chancellor a commitment to our manufacturing sector and what support he will provide to it, as it is so critical to our UK economy?

I do believe that the sector is important to our future, which is why it is being supported with a very significant tax incentive to invest with the super deduction, which we have said we will replace when it expires next spring with further support. Indeed, our energy-intensive industries benefit from around £2 billion of direct intervention with their energy bills.

I welcome this statement from my right hon. Friend. In particular, I welcome the increase in the household support fund. This targeted intervention is exactly what people need. It will be going through the councils, which we have relied on in the past to distribute these funds, notably during the covid crisis. Will he have conversations with our councils to ensure that they have the resources they need for any extra work they need to do? Will he join me in thanking them in advance for the work that they will be doing on this?

As a former local government Minister, I am very happy to join my hon. Friend in paying tribute to our councils for the fantastic work they did during covid and continue to do to support their residents, our constituents, through the challenges ahead. I am happy to tell her that we have a new burdens formula that compensates councils, when it is triggered, with the funding they need.

I do not know if the Chancellor has been to Scotland recently, but I reassure him that we will not be taking any lectures from him on Scotland’s viability as an independent state, sitting as he is on £2.2 trillion of sovereign debt built up by him and the Labour party.

On today’s announcement, what discussions has the Chancellor had with upstream oil and gas manufacturers such as Halliburton and Baker Hughes in my constituency about their future? There is a sunset clause that protects energy companies and reduces the burden when prices come down, but where is the sunset clause for ordinary households? How can they know how long their support will last?

As ever, we keep all situations under review with regard to providing support to households. We know, however, that the most vulnerable are likely, subject to the review of the Secretary of State for Work and Pensions, to see a significant increase in welfare and pension payments next year, based on September’s CPI, which will be significantly in excess of the inflation forecast for that year.

The Chancellor’s £15 billion package will make a massive difference to a lot of people in Dudley South, but can he tell me what distributional analysis he has done on that package? How does that compare with the impact of abolishing VAT on domestic energy?

My hon. Friend makes an excellent point. We have published a distributional analysis today, which I point him to, which shows that the package that we have announced is extremely progressive in nature, with those on the lowest incomes benefiting most. Some three quarters of what we have announced will go to the most vulnerable households, including pensioners. A flat rate payment has the benefit of being more progressive than VAT, which obviously gives very high, or higher, tax discounts to those who are particularly wealthy or have large houses and energy bills.

In acknowledging the Government’s long-overdue U-turns today, we should be clear that the delay has cost people dearly. I relay to the Chancellor that this week, a local housing association told me that it is seeing under-25-year-olds, who are shamefully paid a lower rate of universal credit, using it all on gas and electric bills that are made worse by sky-high standing charges, which account for £3.50 out of every £10 and are particularly high in south Wales. What is he doing to address those long-term issues?

The Energy Secretary is engaged in a conversation with the industry, the Competition and Markets Authority and others about ensuring that our energy market works fairly for consumers. I know that he will treat those matters as a priority.

Is not a huge risk of increasing tax on businesses that they will seek to pass that increased overhead back to consumers? Although the energy price cap will protect people on mains gas and stop that happening to them, a huge proportion of households and businesses in my constituency rely on domestic heating oil and liquefied petroleum gas. What mechanism will my right hon. Friend put in place to ensure that businesses with a higher tax burden do not seek to pass that cost back to those consumers?

In general, the evidence from previous iterations shows that that does not happen, mainly because those commodities are traded at international prices, so the domestic tax regime does not change the price that is being passed on, but I am happy to take my hon. Friend’s point away.

The Chancellor talked about supporting the most vulnerable, but there appear to be questions about his targeting when we look at the detail in the announcement. Everybody accepts that the most effective way to get support to those most in need would be to restore the universal credit uplift and extend that to those on legacy benefits. Why is he ideologically opposed to the action that would have made the biggest difference to the hardest hit?

Again, perhaps the hon. Gentleman did not hear what I said. We are extending the support to all those on means-tested benefits, not just those on universal credit, who account for less than half of all households on means-tested benefits. What we are doing is more comprehensive than what he is suggesting and, in fact, it is more generous, because £650 of support is more generous than uprating, which in aggregate, on average, would be worth only just over £500.

Since 2011, the basic state pension has gone up by 35%. Today, pensioners across Grantham and Stamford are seeing additional support at this very difficult time. Does the Chancellor agree that, ultimately, we need to improve the culture of saving for a pension in this country, so that pensioners are well prepared for future challenges?

My hon. Friend is thoughtful on that topic, and he is right. Previous Governments have reformed auto-enrolment to bring about that change in culture. The advantage that we are seeing now, with financial technology making it far easier for people to access and direct savings, means that we should only see that grow, and we will help to encourage it.

I am sure the U-turn Chancellor will join me in congratulating the architect of one of his previous U-turns, Marcus Rashford, on his recent engagement. Rashford’s campaigning on free school meals reminded us all how vital it is that every child gets a decent hot meal every day at a time when families are struggling to put food on the table. While food prices have risen by almost 7% in the last year, however, funding for infant free school meals has risen by just 4p since they were introduced by the Liberal Democrats in Government in 2014. How does the Chancellor recommend that schools make up the shortfall—by cutting portions for hungry children, or by sacking teachers?

We are continuing to put record amounts into schools’ budgets—more than £14 billion over the next few years. We hear a lot from Opposition parties about the tax burden, but we are actually funding public services. It is incumbent on all those who are calling for even more investment in our schools and our NHS to at least say how they would fund that.

I very much welcome the additional measures announced today, which will help many families across Stoke-on-Trent South. There is one industry, however, that is in need of more support: many ceramics producers in Stoke-on-Trent have not been eligible for much of the support announced in the energy security strategy. Will my right hon. Friend look at further support that could be offered, particularly to ceramics producers in Stoke-on-Trent?

My hon. Friend is a brilliant champion for the ceramics industry in Stoke. I have been pleased to meet him and his constituents on multiple occasions. This is something that the Energy Secretary is looking at to ensure that our support for energy-intensive industries gets to the people who need it most, and I will happily mention this to him.

If the hon. Lady looks at the energy security strategy that the Prime Minister and the Energy Secretary published, she will see that there is a section specifically about more onshore wind, with the consent of communities, and making sure that they benefit from that development.

With the big increases in energy prices and other bills, my right hon. Friend is correct to bring forward these further comprehensive proposals to help the most vulnerable people. This response is rooted in Conservative values, and is better targeted at those most in need than the proposals put forward by Labour. Will he bring that strong focus to delivering the investment, growth and supply-side reform that we need?

My hon. Friend is right that this intervention accords with our values by supporting those most in need at a time of acute distress, but he is also right to focus on the long term. The best way to help people over time and sustainably is to ensure that we have a growing economy with more jobs, higher wages and better skills. That is what we will deliver.

After the Chancellor’s previous announcement of the £150 council tax rebate and the £200 energy bill rebate, 6.5 million households were still classed as fuel-poor. That is 6.5 million households where people will be ill and more likely to die early. With the cap rising to £2,800 in October, there are predicted to be 12 million fuel-poor households. Some of today’s measures are very welcome, but they will just keep the most vulnerable standing still. How many more millions of households will go into fuel poverty in October because of his lack of real action?

As I have said, it will be a difficult time, given the degree of shock that we are seeing to energy prices. We know that energy bills will, on average, will increase by about £1,200 this year. Roughly, most of the 8 million most vulnerable households should receive support worth around £1,200.

The Chancellor and the Government are absolutely right to recognise that more needs to be done, but I suggest to him that generally, lower taxes bring forward greater prosperity over the medium to longer term. As high inflation will be less transitory than many believed—banks were saying only a few months ago that it would be transitory—will he consider raising the minimum wage above inflation to help the lowest paid, given that unemployment is at a record low, and scrapping the corporation tax increases to help industry pay for that?

I am proud that the minimum wage has gone up significantly this year, which puts £1,000 extra into people’s paycheques. Actually, we have a long-term target to increase it to two thirds of median earnings, which will ensure that it tends to rise faster than inflation in normal times, but I am happy to work with my hon. Friend on making that happen.

The Chancellor is slowing one crisis while accelerating another: the climate crisis. Why is he investing in hydrocarbons, which should be staying in the ground, instead of investing in retrofitting properties, which would ultimately save energy costs, as Labour has proposed, and would make a real difference to people’s energy bills?

Unlike the Labour party, we believe in the North sea and in our domestic energy industry. It employs hundreds of thousands of people, and it will help us to increase our energy security, and to transition to net zero. That is why it is wrong to stigmatise it and absolutely right to support it, and to support its investment ambitions as we do.

The Chancellor is of course aware that some 20% of households in Wales are not connected to the mains gas grid, and in rural areas such as Ceredigion that proportion is significantly higher. Will he confirm that the £400 grant he announced today will apply to off-grid homes, and if so, what if anything will those people need to do to receive the support?

The hon. Gentleman raised this recently, rightly. As a rural MP, I share his concerns. The energy bill rebate is based on electricity metered, rather than gas, so it will apply both to his constituents and to mine.

I thank the Chancellor for his statement; the constituents of Newport West will be grateful that he has acted to help them in some small way at long last. However, can he confirm that only those who are already receiving benefits or who started a claim before 25 May will get the first instalment of the £650 he outlined in his statement? Am I right in thinking that this means that a woman leaving an abusive relationship today and needing to claim for the first time will not get this instalment?

The hon. Lady is right that there is of course an eligibility date deadline so that we can process one-off payments, but that is part of the reason why we have staggered the payments in two tranches: to make sure that we catch those who arrive on to the welfare bill between those payments. There will be a stretch period between them to catch as many of those people as possible.

For months now, I have been telling the Chancellor about the financial struggles that many families in my constituency of Coventry North West have been facing. This autumn, families face an energy cap rise of more than £800, which comes on top of record-high inflation. Can the Chancellor honestly tell each and every one of my constituents that today’s announcement is the right decision at the right time? From where I am standing, this feels like a classic example of too little, too late.

This is the right decision at the right time. We are providing up to £1,200 of support to the most vulnerable third of households in this country. As I have said, that is roughly similar to the average energy bill increase that we are likely to experience over this year.

Can the Chancellor tell me if the Treasury has estimated the basic cost of living per week for a single adult, and for different-sized households—yes or no? If it has, how much is it?

I am not sure that I followed the hon. Gentleman’s question, but I know that while many families are facing difficult times, we are providing significant support for them—in total, £37 billion, or 1.5% of GDP. The support we announced today and in February is worth up to £1,200 for a typical vulnerable household—a third of the country.

In my Liverpool, Riverside constituency, 10 children in a class of 30 are living in poverty, with two thirds living in working families on poverty wages. The targeted one-off payment does not go far enough. Does the Chancellor not agree that increasing welfare benefits in line with inflation and lifting the two-child cap will tackle this problem long term, whereas what he proposes today is a sticking plaster on a gaping wound?

The hon. Lady may not have heard what I said the last few times I answered this question. What we are doing is more generous than uprating. Uprating is worth on average just over £500; the one-off payment we are providing is £650.

A number of Members today have drawn attention to the fact that the standing charge on prepayment meters is one of the most inequitable aspects of the entire domestic energy system, and removing it is a key ask in the letter that the Chancellor will have received from the Scottish Finance Secretary yesterday. When will he get together with the Energy Secretary, the energy companies, the regulators and anyone else concerned to bang heads together and remove this unfair charge?

As I have said, the Energy Secretary is extensively engaged with both Ofcom and the industry to make sure that we can support people in the best way.

I thank the Chancellor very much for his statement and for the substantial financial help, which is most welcome. Northern Ireland will directly benefit, as he has said, and I thank him for that. Will the Chancellor confirm that there is a mechanism that ensures the funding goes to the working poor who are on the threshold of universal credit, but do not quite make it? Will he consider realigning the threshold for universal credit with the inflation rate, which would enable those on the border of poverty to stay on their feet and not be knocked over?

That is why, as well as the very generous support for those on means-tested benefits, we have put in place universal support to ensure that all households receive an extra £200 on top of the £200 we have announced. That will help those people, as will the discretionary fund that we have established.

It is right that those companies making billions in excess profits should contribute more tax in these difficult times, and the Chancellor recognised that today by announcing a windfall tax on oil and gas companies. Disappointingly, Labour has been strangely silent on the huge profits made by other big businesses such as Amazon, even though that company’s tax-to-turnover rate is a shameful 0.37%. Can the Chancellor tell us why large corporations such as Amazon, which made billions during the pandemic, are not subject to this windfall tax? If they were, more help could be given to more people.

I am proud that this Government worked to agree a new international taxation agreement, signed by over 130 countries, so that we can tax the profits of large digital companies more fairly. That will come into effect in the coming months and years. It is something we should all be proud of and can all get behind. I believe that the Labour party opposes the policy and would scrap that treaty.

My borough of Enfield has the 11th highest rate of child poverty in the country, and one in five people are on low pay. While the Chancellor has been dragged kicking and screaming to an inevitable outcome, families have been suffering for months. The measures today are welcome, but they need to be delivered efficiently and effectively. Can the Chancellor therefore outline what steps he will take to speed up the painfully slow council tax rebate, which is causing significant distress to my constituents?

I know councils are working as hard as they can to get the payments to people, and we of course remain engaged with them, to help provide the support that they need to do that as fast as possible.

I thank the Chancellor of the Exchequer for his swift answers to the questions following his statement.