LONDON: The British government unveiled a multibillion-pound package Thursday to ease a severe cost-of-living squeeze, announcing the plan a day after Prime Minister Boris Johnson vowed to “move on” from a months-long scandal over parties in government buildings during COVID-19 lockdowns.
Treasury chief Rishi Sunak said the government would introduce a temporary windfall tax on the profits of oil and gas firms. The tax is expected to raise around 5 billion pounds ($6.3 billion) over the next year and fund cash payments to help millions of people cope with sharply rising energy bills, Sunak said.
He said some 8 million of the country's lowest-income households will receive a one-off government payment of 650 pounds ($818).
Johnson had opposed a windfall tax, and his Conservative government previously said that imposing one would deter investment in the U.K.’s energy sector. But the government is under heavy pressure to act as skyrocketing energy and food bills cause financial hardship for British households.
Sunak said the temporary levy would feature an "investment allowance” to motivate companies to reinvest their profits.
U.K. inflation hit 9% in April, the highest level in 40 years, and millions of customers saw their annual energy bills jump by 54% the same month — amounting to an extra 700 pounds ($863) a year on average for each household.
Britain’s energy regulator said this week that domestic energy bills could shoot up by another 800 pounds a year in the fall, as Russia’s war in Ukraine and rebounding demand after the pandemic push oil and natural gas prices higher.
Johnson’s government is trying to turn a page after an investigator’s report on what has become known as the “partygate” scandal slammed a culture of rule-breaking inside the prime minister's No. 10 Downing St. office.
In the report published Wednesday, civil service investigator Sue Gray described alcohol-fueled bashes held by Downing Street staff members in 2020 and 2021, when pandemic restrictions prevented U.K. residents from socializing and visiting sick or dying relatives.
Gray said the “senior leadership team” must bear responsibility for “failures of leadership and judgment.”
The prime minister said he was “humbled” and took “full responsibility” -- but insisted it was now time to “move on” and focus on Britain’s battered economy and the war in Ukraine.
Johnson still faces an inquiry by a House of Commons standards committee over whether he lied to Parliament when he insisted no rules had been broken in Downing Street. Ministers who knowingly mislead Parliament are expected to resign.
The scandal leaves Conservative Party lawmakers in a quandary: try to topple their leader amid a war and financial crisis, or stick with a prime minister whose perceived willingness to flout rules he applies to others has caused public outrage.
Under party rules, a no-confidence vote can be triggered if 15% of party lawmakers — currently 54 — write letters calling for one.
If Johnson lost such a vote, he would be replaced as Conservative leader and prime minister. It’s unclear how many letters have been submitted so far, but the number is growing.
Two more Tory legislators, John Baron and David Simmonds, called Thursday for Johnson to resign.
Baron said Johnson’s previous claim “that there was no rule-breaking is simply not credible,” and therefore he had misled Parliament.