Rishi Sunak eyes poverty grants to tackle cost-of-living crisis

Rishi Sunak is preparing to announce up to £500m worth of grants to help struggling households deal with a mounting cost of living crisis, it was claimed on Wednesday.

The Chancellor is reportedly drawing up a major package which would be targeted at poorer households under strain amid a surge in energy prices, cuts to benefits and the winding down of the furlough scheme.

According to Bloomberg, the grants would be distributed through local authorities and would replace the current Covid-19 local support grant scheme, which is due to end in the coming days.

The Covid scheme was set up to help households struggling with the cost of food and utility bills during the pandemic, and has paid out more than £425m so far.

It comes amid mounting concern among Tory MPs over the financial strain being placed on poorer households, as soaring electricity and gas prices are set to push up energy bills by hundreds of pounds for millions of people.

The hiking of the energy price cap by 12 per cent next month is also due to coincide with the ending of the temporary £20 weekly uplift in Universal Credit.

Labour has warned that half a million families now risk being plunged into “fuel poverty” and have demanded the Government U-turn on the cut to UC, but this has been dismissed by ministers.

Motorists queue for fuel in east London

Credit: AFP

Last week Tory MPs Sir Christopher Chope and Robert Halfon also called for the Chancellor to slash VAT on energy bills to help soften the blow of rising energy prices.

However, Government sources have pushed back against the calls, suggesting it would have a minimal impact.

Inflation is also running well above the Bank of England’s target and in August rose 1.2 percentage points to 3.2 per cent, its highest level since 2012.

It is now expected to hit 4 per cent by the end of the year, in turn pushing up household bills further.

Meanwhile, the furlough scheme, which the Government says has protected 11.6m jobs during the pandemic, is due to come to an end at the same time.

Although the economy has reopened and the recovery is underway, forecasters, including the BoE, are expecting a small rise in unemployment.

The cost of living crisis is likely to lead to mounting pressure on Mr Sunak to announce further support for households in the run up to the Budget on October 27.

The Treasury was approached for comment.

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