Economy Update

Baroness Wheatcroft Excerpts

Thursday 26th May 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, as I have said already, we are looking at certain parts of the energy generation sector that are also making extraordinary profits, because the price that electricity generators are paid is linked to the price of natural gas. So, like many other countries, we are looking at what measures we might want to take to correct that and engaging with industry urgently on it. On how the support we are providing is delivered and targeted, the Chancellor, as my noble friend would expect, looked at many different options for how best to support people. This package strikes the right balance in terms of targeted and universal support, simplicity of delivery mechanism and the speed at which support can get to people, and it should be very welcome.

[Baroness Wheatcroft (CB)]

My Lords, we are told that the windfall tax will raise around £5 billion and that the cost of the £650 for households will total around £5 billion—it is probably £5.2 billion. Can the Minister tell us the cost of the other measures announced today and how those are to be funded? Given that the Chancellor has also said that he will honour the pledge to restore the triple lock on pensions, and that they will go up by CPI at the rate that is likely to be in September, how is that going to be funded?

[Baroness Penn (Con)]

In terms of the funding, the noble Baroness is absolutely right: the total cost of the package is around £15 billion. It will be part funded by the levy and the rest will be funded by borrowing. As my right honourable friend the Chancellor said, it is part of an overall fiscally responsible approach. We have ensured that our approach is both targeted and time-limited, so that is the case. I am afraid that I have forgotten the noble Baroness’s other—

[Baroness Wheatcroft (CB)]

If I may, the Chancellor’s Statement says that the levy raises around £5 billion of revenue and that

“it avoids having to increase our debt burden further.”

I am slightly puzzled.

[Baroness Penn (Con)]

My Lords, I have remembered the noble Baroness’s second point about increasing benefits next spring in line with September’s CPI inflation. I can confirm that that is the Government’s intention and I think that would be costed by the OBR in the fiscal forecasts already in place. The other spending will be paid for by borrowing, but it is a one- off cost.