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UK must pay for household support without deterring investment


© Reuters. FILEPHOTO: A crowd enjoys the warm weather near London’s financial district, London, Britain. May 18, 2022. REUTERS/Hannah McKay

By Muvija M

LONDON, (Reuters) – Britain should pay more for households to encourage investment. This was the Cabinet Office minister Steve Barclay’s statement on Thursday. He made this comment ahead of an anticipated announcement about new measures to address rising energy costs.

Barclay stated that when it comes to paying for this, we must balance how much of that is done via debt and revenue raising. This will not deter investment.

Rishi Sunak (finance minister) will give more details on the government’s response to growing costs-of-living pressures faced by households later Thursday.

According to an industry source, this package will include a 10-billion-pound ($12.6billion) support package. It is partially funded by windfall taxes on oil and natural gas producer companies.

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Barclay stated that the government had acted after the announcement earlier in the week by the energy regulator, which said that the cap on electricity and gas bills would rise another 40% by October.

Barclay stated that “What we recognize… is that the government must have targeted support,” especially for the most affected people by higher prices.”

Last year saw global gas prices soar after the world’s economies were reopened from pandemic lockdowns. Demand increased sharply last year and supplies couldn’t keep pace. In 2022, prices have increased further because of the war in Ukraine.

The government previously stated that it was opposed to the imposition of a windfall tax upon energy suppliers as it would discourage them from investing into new energy projects.

However, the political pressure to act has increased and soaring inflation has caused many households budgets to be stretched.

Boris Johnson, Prime Minister of the United Kingdom is keen to shift attention from a disturbing report that details a number illegal lockdown parties held at Downing Street’s office.

With opinion polls showing support, the opposition Labour Party has pushed for an oil and gas company windfall tax to raise about 2 billion pounds ($2.5 billion).

Barclay answered questions about a windfall income tax but said that he didn’t agree with Labour’s plan. He declined to discuss the new government plan and stated that it was up to Sunak to explain the details to parliament.

Sunak will likely speak at 1030 GMT.

($1 = 0.7963 pounds)