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Boris Johnson flies home into growing storm over soaring food and energy prices, tax hikes and benefit cuts

·3-min read
Boris Johnson has been in the US for three days  (PA)
Boris Johnson has been in the US for three days (PA)

Boris Johnson flew back to a growing storm in Britain on Thursday over rising food and energy prices, the cut to Universal Credit and tax hikes.

After a three-day trip to America, the Prime Minister faced warnings of a looming winter crisis, though ministers denied it would be a return to 1970s’ shortages.

However millions of households face budget squeezes as:

* Industry experts estimated that around 300,000 of the 1.9 million energy customers whose suppliers have already gone bust this year are London based, with many of them being hit with bill rises from cheaper deals.

* Business minister Paul Scully made clear that the energy price cap, keeping down bills, could rise in the spring which would mean higher prices for millions. He told Sky News: “There are clearly pressures on that.”

* Tesco chairman John Allan said food prices could rise by around five per cent, pushed up by inflation, labour shortages and energy costs.

“We’re probably looking at, for food overall, you know, mid-single digit increases which is much higher than we’ve had in recent years,” he told ITV’s Robert Peston.

* Leading Conservative Baroness Ruth Davidson rejected arguments put forward by the Government on axing the £20-a-week Universal Credit top-up brought in during the pandemic.

The former leader of the Scottish Conservatives said: “I don’t think any of it washes...It’s the wrong thing to do for people on low incomes.”

She added: “It’s bad politics as well because we’re taking the hit now on this, but we’ll also take the hit when we eventually put Universal Credit back up another £20, because as you say inflation is back, and we will see a rise in that benefit.”

* But Mr Scully said taxes would need to rise even higher to keep the £20 UC uplift.

He said: “If you were to reverse the Universal Credit as it is, you would have to put up income tax by the equivalent of a penny and 3p on fuel.

“You have to find £6 billion from somewhere.”

* Ministers believe the system for energy companies that fail is currently working, with bigger firms such as British Gas and E.ON able to charge an industry-wide levy to cushion the cost of taking on customers from these firms, though it was not clear whether that levy will be passed on to customers.

State-backed loans could still be offered to the big firms to take on unprofitable customers if, as feared, far more energy firms go bust.

Mr Johnson, who arrived back in the UK shortly before 10am, has argued that the spike in energy costs will be temporary.

However, Mr Scully said the Government is planning for the “worst-case scenario” of gas costs remaining high beyond just a “short spike”.

Meanwhile, Citizens Advice warned that as many as 1.5 million working people could be forced into hardship this winter by withdrawing the £20 per week UC boost.

Research carried out by the independent advice provider suggested that two-thirds of working claimants are bracing themselves to face hardship when the uplift is abolished at the end of the month.

Financial fears include struggling to pay their bills, getting into debt or being forced to sell belongings to make up for the shortfall in their income.

Millions of households are also set to be hit in the spring by the 1.25 percentage point hike in National Insurance contributions to boost funding for the NHS and tackle the social care crisis.

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