Boris Johnson expects “substantial sums” to help with the cost of living to be provided by his successor as prime minister.
He heaped pressure on the new prime minister to act after Chancellor Nadhim Zahawi insisted “no-one should be cut off” because they cannot afford their energy bills.
We have the revenues coming to the exchequer to enable us to help people. That gives us the strength to continue to support people
Their remarks came as the Resolution Foundation warned the next prime minister’s time in office looks set to be dominated by the “terrifying” prospect of the biggest squeeze in living standards for a century, as energy bills soar and inflation worsens.
Regulator Ofgem has confirmed an 80% rise in the energy price cap, which will mean the average household’s yearly bill will go from £1,971 to £3,549 from October.
Mr Johnson, speaking in Suffolk as he confirmed support for the Sizewell C nuclear power project, said: “We’re helping people now with the cost of living and of course there will be more cash to come, whoever takes over from me, in the months ahead – substantial sums, that’s absolutely clear.”
He added it was “clear that come the new administration, there is going to be a further package”, telling reporters: “We have the fiscal firepower to sort it out.
“We do have a robust employment situation, we have the revenues coming to the exchequer to enable us to help people. That gives us the strength to continue to support people.”
I will also deliver immediate support to ensure people are not facing unaffordable fuel bills
During his speech, Mr Johnson compared the benefits of nuclear investment in reducing energy bills to buying a new kettle.
He said: “If you have an old kettle that takes ages to boil, it may cost you £20 to replace it. But if you get a new one you will save £10 a year every year on your electricity bill.”
Critics of the Prime Minister on social media interpreted this comment as cost-of-living advice.
Measures already announced by the Government include a universal £400 discount on energy bills, and one in four UK household will receive a total of £1,200 extra support.
Tory leadership frontrunner Ms Truss dropped further hints that she has softened her stance and is prepared to provide cost-of-living support rather than simply aim for tax cuts.
The Foreign Secretary, writing for The Sun, said: “I will also deliver immediate support to ensure people are not facing unaffordable fuel bills. I will be robust in my approach. But it isn’t right to announce my entire plan before I have even won the leadership and got my feet under the table.”
Mr Zahawi, speaking to Sky News during a visit to the US, was asked if he could guarantee no-one will find be cut off because they cannot afford to pay their bills.
He said: “I’m working with the (energy) companies to make sure – and NGOs, of course – to make sure those people who really are struggling get that help both financially… but the companies themselves have already started to write letters and emails to ask people if they are vulnerable, if they are feeling that they can’t pay, that they should contact their supplier, their companies.
“My pledge to your viewers is that we will deliver the £37 billion – so that £1,200 to the most vulnerable eight million households – but we’ll go beyond that because we know we need to, and we need to send a message to Mr (Russian President Vladimir) Putin that this strategy is not going to work.”
The Chancellor also conceded that “of course” the current support offered by the Government to deal with rising energy prices will not be enough, and said his team is looking at options for the next administration.
“There’s nothing off the table” for options to deal with rising energy prices, he said, but he warned “there are no easy options”.
Asked how concerned he is that people are going to freeze this winter because they cannot afford to put their heating on, Mr Zahawi said: “I’m deeply concerned.
“Those people on pre-paid meters, that’s why I go back and say to you, my preference is targeting the help.”
— Resolution Foundation (@resfoundation) September 1, 2022
A report from the Resolution Foundation warned that real household disposable incomes are on course to fall by 10% over this year and next, and that the number of people living in absolute poverty is set to rise by three million to 14 million people in 2023-24, unless policy or economic forecasts change.
With real earnings falling at their fastest rate since 1997, the think tank also warned that, by the middle of next year, real pay growth since 2003 will have been wiped out.
The 10% fall in mean disposable income by 2023-24 “is likely to be the worst for at least a century”, the report said, equivalent to £3,000 for the typical household.
The “sharp rise” in the number of people in absolute poverty, projected at more than three million between 2021-22 and 2023-24, would be the worst two-year change on record, the report added.