LONDON (BLOOMBERG) – Boris Johnson’s government will set out fresh support for Britons struggling with a record squeeze on living standards on Thursday (May 26), seeking to move on from a damning report into illegal parties in Downing Street and confront a cost-of-living crisis that may eventually prove more threatening to his political future.
Chancellor of the Exchequer Rishi Sunak will reveal a comprehensive response to help households facing soaring bills, a Conservative Party official said, speaking on condition of anonymity. Mr Sunak’s offer, which will be partly funded by a windfall tax on the profits of oil and gas companies, won’t be a one-off and there is more support in the works, the person said. The Treasury declined to comment on Mr Sunak’s expected announcement.
Mr Johnson’s pivot to focus on the cost-of-living follows a bruising day when a long-awaited civil service report slammed the prime minister, holding him responsible for a string of gatherings which saw staff members drinking heavily, singing karaoke and in one instance even vomiting, all while the rest of Britain was under strict coronavirus restrictions.
Containing a historic surge in global prices may test all the famed resilience of a leader who has been regularly distracted by his own political problems as the pressure on British families has risen over recent months. Britain is on track to be the advanced nation worst hit by a combination of soaring inflation and weak growth, with prices expected to rise 13 per cent over this year and next, the most among the Group of Seven countries.
“It’s a complex, big-picture issue that requires a serious, substantive response,” said Dr Alice Lilly, senior researcher at the Institute for Government, a think-tank. “Going from discussing vomit in Downing Street to these really important issues is going to be a challenge.”
Mr Johnson has been under persistent pressure for months to announce extra help to alleviate the cost-of-living burden, with his government facing accusations of being out-of-touch and unsympathetic to voters’ concerns. He’s faced particular calls to introduce a windfall tax on the large profits of oil and gas companies to pay for extra support, which he’s so far resisted, saying its out of sync with his Conservative values.
The Treasury has carefully considered the arguments for such a tax and officials want to make sure the benefits are worth the hit to the UK’s reputation as a stable, low-tax jurisdiction and to minimise the threat to investment, the Conservative Party official said. Economic help will be targeted at the most vulnerable households, the official added.
The need for a cost-of-living support package became more urgent this week when UK energy regulator Ofgem said Britons face another sharp jump in their power and gas bills just before the winter. The energy price cap is due to rise to a record ?2,800 (S$4,850) in October, a 42 per cent increase that would send 12 million households into fuel poverty.
Mr Johnson is also under pressure to act given a difficult electoral outlook that may only worsen as Britain’s inflation crisis develops. A YouGov poll published on May 20 showed the opposition Labour Party with an eight-point lead over Mr Johnson’s Conservatives.
Labour have been ahead of the Tories in YouGov’s polling since late December. Mr Johnson’s Tories also performed poorly in local elections earlier this month, where they lost ground in the Conservatives’ southern heartlands. Another YouGov poll on Wednesday said 59 per cent of Britons think Mr Johnson should resign as prime minister in the wake of the Sue Gray report.
The lack of any major new revelations led several Conservative Members of Parliament to dismiss the report as a damp squib, saying that it hadn’t threatened Mr Johnson’s position. Only one new MP came out and called for Mr Johnson to resign following the report’s publication.
But another of his regular critics raised a more serious threat for the Tories: that Mr Johnson survives Partygate only to lead them to defeat in the next election, expected in 2024.
“Can we win the general election on this current trajectory?” Tory MP Tobias Ellwood asked in the Commons. “If we cannot work out what we’re going to do, the broad church of the Conservative Party will lose the next general election.”