Rishi Sunak baffles MP with claims Universal Credit is 'generous'
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The Chancellor commented on a £9 billion package he announced last month, which included council tax rebates and loans to reduce the impact of price rises. Speaking to the Treasury select committee, Mr Sunak said that estimates for the energy price cap have ranged from £2,500 to £3,500 as he warned about the “volatility” of energy prices.
He said: “None of us know what the price cap is going to be in the autumn. That is incredibly volatile.
“We will continue to monitor the situation and, as we know more, are prepared to act if necessary.
“It is very difficult to sit here today and speculate on what happens to energy prices, the biggest impact on living standards, in the autumn.”
The energy price cap will rise from about £1,300 per year to nearly £2,000 on Friday, and forecasts have suggested that it could rise as high as £2,800 in October.
Mr Sunak has denied claims that he has styled himself as a tax cutting Chancellor despite having set out a vision to cut taxes over the course of the Parliament.
However, he is widely seen as more fiscally conservative compared to Boris Johnson.
Mr Johnson is seen as more willing to spend in order to retain the support of voters in marginal Red Wall seats who backed his party at the last general election.
In contrast, Mr Sunak is seen as more concerned about the high levels of public spending during the coronavirus pandemic.
This is one of the reasons it’s believed he ignored critics and pushed ahead with the national insurance rise.
Despite the fact that the Government has £20 billion in fiscal headroom, Mr Sunak is insistent that this could be wiped out by small changes such as a one percent increase in interest rates.
He also argued that increasing benefits in line with inflation would have been “irresponsible” as it would increase Government borrowing by £25 billion.
It comes as Governor of the Bank of England Andrew Bailey said on Sunday that the “shock” of the energy price increase would be bigger than the oil crisis of the 1970s.
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Mr Bailey told an event hosted by the Bruegal think tank in Brussels that the volatility of commodity prices since the Russian invasion of Ukraine was a bigger challenge to the global economy than the 2008 financial crisis.
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