U.K. Touts Help for Energy Bills

Britain’s Conservative government unveiled a 15 billion-pound ($19 billion) emergency aid package Thursday to ease a severe cost-of-living squeeze.

Treasury chief Rishi Sunak said the government would introduce a 25% 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 to help fund cash payments to help millions of people cope with sharply rising energy bills, Sunak said.

He said the government help will target the most vulnerable people, including disabled people and retirees. Some 8 million of the country’s lowest-income households will receive a one-time government payment of 650 pounds ($818).

Every household will also receive a 400-pound ($503) discount on domestic energy bills in October.

The announcement of the windfall tax was a U-turn for Johnson’s Conservative government, which had 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 invest in oil and gas extraction in the U.K.

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.