Sunak Set to Unveil Grants to Help Britons With Cost of Living

(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak is set to announce a new program of grants to help Britons struggling with the cost of living amid a surge in energy prices and as the U.K. government phases out more generous coronavirus support.

The plan is worth as much as 500 million pounds ($672 million) and may be announced in coming days, according to a person familiar with the matter who requested anonymity discussing unannounced policy. It’s designed to help poorer households cope with the cost of living over the winter, the person said. The Treasury declined to comment.

The new grants would be distributed through local authorities, replacing the Covid-19 local support grant program, which is due to end Thursday. That was designed to help vulnerable households struggling with the cost of food, energy and water bills during the coronavirus pandemic, and along with a predecessor plan last winter has paid out more than 425 million pounds to help those most in need.

Boris Johnson’s Conservative government has come under increasing pressure from the party’s own rank-and-file lawmakers and opposition parties to help the poorest Britons as the demands on household budgets grow, sparking warnings of a difficult winter.

Inflation is running well above the Bank of England’s 2% target, energy bills are set to jump next month, and at the same time the government is cutting benefits and ending the furlough program that’s supported more than 11 million jobs throughout the pandemic.

There’s particular concern among Members of Parliament for poorer Britons because of a series of imminent pressures on household budgets. 

A price cap on domestic energy bills that protects 15 million households from soaring bills is due to go up 12% on Oct. 1, adding 139 pounds a year to the average bill. On Oct. 6, the government is ending a 20-pound-a-week uplift to universal credit benefit payments to unemployed and low-wage Britons that’s been in place throughout the pandemic. That represents a hit of more than 1,000 pounds a year to vulnerable families.

Last week, Conservative MPs Christopher Chope and Robert Halfon pushed Business Secretary Kwasi Kwarteng to help consumers by cutting the value added sales tax on consumer energy bills. Kwarteng has declined to rule that measure out, saying it was a matter for Sunak.

As a result of the drop in benefits and rise in the cost of living, low income families face being 31 pounds a week poorer from next month, according to analysis from the Joseph Rowntree Foundation. From April, the government’s planned tax hike to pay for health and social care will cost them an additional 2.50 pounds a week, it said.

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