Windfall tax within days as Boris Johnson tries to move on from partygate

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Boris Johnson could bring forward measures to deal with the cost of living, with Sue Gray's partygate report expected on Wednesday - Daniel Leal/Getty Images
Boris Johnson could bring forward measures to deal with the cost of living, with Sue Gray's partygate report expected on Wednesday - Daniel Leal/Getty Images

Boris Johnson is this week poised to announce help for millions of households to pay their energy bills as he battles to move on from Sue Gray’s partygate report.

The Treasury is finalising plans for a windfall tax on energy firms, which will be used to fund new support for those struggling most with the cost of living crunch.

On Tuesday, it emerged the energy price cap is set to jump to £2,800 in the autumn, according to estimates from the regulator Ofgem – an increase of around £800.

The support is set to be unveiled in the wake of the report by Ms Gray, a senior civil servant, into lockdown-breaking parties in Downing Street. It is expected to be published on Wednesday.

Her findings are set to be highly damaging and name and shame senior politicians and civil servants as she concludes there was widespread flouting of Covid rules and leadership failings.

On Tuesday, it emerged that Downing Street security staff, known as “custodians”, had warned that lockdown parties were illegal but were laughed at and ignored.

Following the expected publication of the report, Mr Johnson is set to appear at Prime Minister’s Questions, deliver a Commons statement on the report, hold a press conference and then address MPs at the 1922 committee.

In an attempt to draw a line under the saga, major new measures to help with the cost of living are expected to be brought forward and announced as soon as Thursday.

Rishi Sunak, the Chancellor, has concluded that a one-off windfall tax on oil and gas companies is justified, given that some have seen their profits double as prices soar. The tax could be directly linked to the amount of investment each company delivers.

In return, he is expected to announce a multi-billion pound package of support for households most affected by soaring energy bills.

It had been expected that the plans would be announced after the Platinum Jubilee bank holiday but, by bringing the announcement forward, Number 10 may hope to change the subject from the fallout of the Gray report.

Backbench Tories have been demanding financial support for families for weeks. An announcement before Parliament goes into recess on Friday would allow them to go back to their constituencies with the message that the Government is helping on the cost of living.

However, Mr Johnson has reportedly been reluctant to back a windfall tax, with allies of the Prime Minister pinning the enthusiasm for the tax on the Treasury.

It echoes the framing of the National Insurance increase announced last autumn, when sources close to Mr Johnson were keen to stress he had wanted to help the NHS, but not via a tax rise.

He will have to contend with the fact that, while polling suggests a windfall tax is popular with the public, there is grumbling from within the Cabinet about the plans, as well as from firms that would be affected.

The Telegraph understands that Kit Malthouse, the policing minister, repeated his calls for low taxes during Tuesday’s Cabinet meeting. An adviser to another frontbencher also criticised the move.

On Tuesday, Jonathan Brearley, the Ofgem chief executive, revealed that he expects the energy price cap to increase to around £2,800 this October.

That is around £800 more than than the current energy price cap, which only came into effect last month, and around £1,500 above where it was in October last year.

Mr Brearley’s decision to write to Mr Sunak sharing that estimate, months before a decision on the price cap is due in August, led to speculation a government announcement of help is imminent.

Industry figures have been told to expect an announcement on Thursday, the last day before Parliament breaks for more than a week for the Platinum Jubilee.

The exact make-up of the support package and how wide-ranging the windfall tax will be was still being debated inside the Government on Tuesday, with the Treasury insisting no final decisions had been taken.

Extra support on Universal Credit – the benefits payment that more than five million people receive – is widely expected. Mr Sunak favours “targeted” support.

One option being considered is agreeing to increase Universal Credit in line with inflation now, rather than next spring as planned. Another is to give roughly the same group of people one-off cheques instead.

An expansion of the Warm Home Discount Scheme, which offers millions money off their electricity bills, or a new discount to council tax have also been considered.

Treasury figures were told a decision on the Warm Home Discount was needed within days, in order to deliver changes by autumn – another sign that an announcement is imminent.

Ms Gray’s long-awaited full conclusions into what happened at alleged lockdown-breaking parties in government buildings carries political risk for Mr Johnson.

More than a dozen top civil servants, political advisers and ministers are expected to be named and criticised.

Photographs may be included, although those monitoring discussions were split on whether that would happen, how many images would appear if so and whether anyone would be blurred out.

People who are to be named have been contacted by Ms Gray’s office and told broadly what will be written about them, triggering legal responses that have taken days to process.

Scores of Conservative politicians have insisted for months that they will decide whether to submit a letter of no confidence in Mr Johnson once they see Ms Gray’s report.

The process is secret, meaning the exact figure of letters submitted is unknown. A leadership vote would be triggered if 54 Tory MPs put in letters.

The emergence of a photograph of Mr Johnson raising a toast at a leaving party during the second national lockdown has led to fresh criticism.

Mark Harper, who has called for Mr Johnson to quit, said Conservative MPs were being “asked to go out on the television day after day and saying things that are frankly ridiculous and defending the indefensible”. He added: “That’s not what a leader should do.”

Sir Roger Gale, the Tory MP and long-term critic of Mr Johnson, said: “I don’t want to be sanctimonious about this, but to say there was a leaving do – my constituents attended terminal leaving dos in crematoriums and graveyards and weren’t allowed to raise a glass to their dearly departed because of the regulations in place.”

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