Cost of living payments for millions as Sunak announces windfall tax on oil and gas profits – as it happened

Sunak is now announcing measures to help people.

He says around eight million of the lowest-income households will get £650. That will be worth around £5bn, he says.

The money will come in two lump sums.

He says this will be worth more to people than uprating benefits.

UPDATE: Sunak said:

Right now [low income households] face incredibly difficult choices so I can announce today we will send directly to around 8 million of the lowest-income households a one-off cost-of-living payment of £650, support worth over £5bn to give vulnerable people certainty that we are standing by them at this challenging time

DWP will make the payment in two lump sums, the first from July, the second in autumn, with payments from HMRC for those on tax credits following shortly after.

Sunak says households are being hit hard now.

The government will provide significant support, he says.

As it supports people more, it needs to think of the fairest way to fund that.

The oil and gas sector is making extraordinary profits, not because of extra risk taking or efficiency, but because of surging energy prices. So he is sympathetic to the case of taxing those profits fairly.

Labour MPs are jeering loudly. Dame Eleanor Laing, the deputy Speaker, asks for “quieter banter”.

Sunak says there is a middle way. He will impose a tax, but with an incentive for firms to invest.

The new measure will be the “temporary targeted energy profits levy”, he says.

This euphemism for windfall tax generates loud laughter.

It will be set at 25%, and temporary, he says. He says a sunset clause will be in the bill.

And firms that invest will get tax relief on 90% of their investments.

UPDATE: Sunak said:

Like previous governments, including Conservative ones, we will introduce a temporary targeted energy profits levy, but we have built into the new levy ... a new investment allowance similar to the super-deduction that means companies will have a new and significant incentive to reinvest their profits.

The new levy will be charged on profits of oil and gas companies at a rate of 25%.

It will be temporary and when oil and gas prices return to historically more normal levels the levy will be phased out.

Sunak says fiscal support should be “timely, temporary and targeted”.

Sunak says high inflation should not be allowed to continue long term.

The government can use monetary responsibility (interest rates), fiscal responsibility (not spending too much) and supply side activism (building more nuclear energy plants and offshore windfarms) to address the problem, he says.

Sunak says no government can solve all problems, particularly global ones.

But this government will not stop trying to help people.

We need to make sure that for those whom the struggle is too hard, and for whom the risks are too great, this government will not sit idly by.

Inflation is at it highest rate for 40 years. It is expected to average 9% this year.

He says global factors are driving this.

Over the course of the year, the situation has become more serious.

“Core inflation” has become broader based, and elevated.

And the UK is acutely exposed to the European energy market. And, like the US, it has a tight labour market.

He says low unemployment is good news. But it contributes to the UK’s relatively high rate of inflation.

Rishi Sunak is making his statement now.

He says high inflation is causing “acute distress” for people.

He will explain what is happening, why, and what the government will do about it.

Labour has been calling for a windfall tax on energy companies to fund support for people with their energy bills for months and so when Rishi Sunak embraces the idea in his statement, which is likely to start in the next half an hour or so, that will mark a major victory for the opposition.

Steven Swinford from the Times says Sunak will try to argue that his windfall tax is different, and more Conservative, than Labour’s.

But it is likely that this nuance may be lost as the headlines get written. For a long time Sunak just argued that a windfall tax would be bad in principle, because it would deter investment.

In politics it is generally good to be winning the arguments, and governments that make frequent U-turns (like Boris Johnson’s) find that their MPs can no longer be confident that they will persist with any of their policies.

But the move marks a threat to Labour too. Sunak is about to pinch their best known, and most popular, economic policy, which means they will have to recraft their campaign messaging.

In a tweet this morning Keir Starmer attacked Sunak for performing his U-turn too late.

Presumably, once the detail is out, a more robust Labour attack line will emerge.

Labour’s Emily Thornberry struck a nerve in the Commons earlier when she asked Suella Braverman, the attorney general, if she had authorised the leaking of government legal advice about the Northern Ireland protocol. Braverman ducked the question and then – as Thornberry continued to effectively heckle her by repeating the question as she was sitting on the opposition front bench – embarked on a remarkable rant about her Labour opposite number, describing her as a Leninist.

Thornberry asked Braverman:

The attorney general has said again today that there’s a long-standing convention that prevents her discussing either the fact or the content of her legal advice on the Northern Ireland protocol, which makes it all the more remarkable that on Wednesday May 11 the Times newspaper and BBC Newsnight not only disclosed the fact of her legal advice but actually quoted from its contents. So, can I ask the attorney general one very straightforward question, which only requires a yes or no answer: did she personally authorise the briefings to the Times and to Newsnight regarding her advice on the protocol, yes or no?

In response, Braverman said she took the convention “incredibly seriously”, but she said she would not comment on media speculation. She said there were “big differences” between herself and Thornberry, and that she was “very disappointed” by Thornberry’s line of attack. Then she went on:

I love the United Kingdom, [Thornberry] is embarrassed by our flag. I’m proud of the leadership the United Kingdom has demonstrated, and [Thornberry] wants us to be run by Brussels and wants to scrap Trident. My heroes are Churchill and Thatcher, hers are Lenin and Corbyn.

Normally internal government legal advice is never released, although sometimes ministers do agree to publish it. Braverman has refused to discuss in public what her legal advice on the protocol may have said, but she did not seem overly upset about the leak and, as the exchanges with Thornberry showed, would not deny authorising it.

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We will find out what Rishi Sunak is going to announce in about an hour or so. If you are interested in what thinktanks think he should announce, here are contributions from three of them.

In a briefing paper published yesterday, the Resolution Foundation says “one-off payments (delivered through existing mechanisms such as the winter fuel payment or Christmas bonus systems) to all households on benefits (including all pensioners) are now preferable and probably easier to deliver than alternatives”.

The New Economics Foundation says Sunak should raise £13bn from a windfall tax set at 70%. Miatta Fahnbulleh, its CEO, explains more in a Twitter thread starting here.

And the Institute for Government says, in a briefing paper published yesterday, that the government “should be wary of introducing broad based tax cuts, for example to VAT, or spending giveaways, since these would be expensive and not targeted enough to boost the household finances of those most in need”.

And these are from Steven Swinford, political editor of the Times, on the Rishi Sunak package coming later.