Rishi Sunak has said cost of living support delivering hundreds of pounds to every household will have a “minimal impact” on inflation – and suggested those who do not need it could give the money to charity.
The chancellor told Sky News that the announcement of new measures worth £15bn to ease the burden on squeezed households was “targeted at those most in need”.
Under the plans, every home will see £400 knocked off their energy bills – an upgrade from a previous policy of loaning them £200 to be repaid over five years – while eight million of the most vulnerable will also receive £650.
It comes at a time when inflation of 9%, a 40-year high, is squeezing households’ spending power, largely thanks to soaring bills for gas and electricity – which are expected to rise by another £800 on average in the autumn.
The universal nature of the energy rebate will have the effect of helping many who do not need any assistance – and Mr Sunak suggested to Sky’s Niall Paterson that “you, like me… can give that money to charity if you don’t need it”.
He added: “Our estimate in my view is that it will have a minimal impact on inflation.”
Asked if it would lift inflation by one percentage point he said “much, much less than that”.
“What we’re doing is very targeted at those most in need. We’re also raising money to help pay for it,” Mr Sunak said.
“The combination of those two things is the responsible approach.
“Even though we are supporting the economy we want to make sure that we don’t make the inflation situation worse.”