Rishi Sunak has been urged to give families a ‘cost of living bonus’ worth up to £500 to help them deal with rising energy bills and soaring inflation.
According to The Social Market Foundation, a cash payment is the most effective way to address the crisis of cost-of-living. This would allow households to spend their money as they wish.
The Government’s Chief Economic Officer, Dr Aveek Bhattacharya said that the Government “should not succumb to temptation to complicate its responses” amid increasing calls for the Chancellor’s attention to the crisis.
Rishi Sunak has been urged to give families a ‘cost of living bonus’ worth up to £500 to help them deal with rising energy bills and soaring inflation
Social Market Foundation’s think tank suggested that one-off cash payments would be the best way to address the cost of living crisis. Households could use the money as they wish.
The think tank recommended that households where no one is a higher-rate taxpayer should get a cheque for £300.
Meanwhile, families who are on Universal Credit or legacy benefits would receive an additional £200.
The government is exploring a variety of solutions to the rising cost of living, such as granting loans for energy companies or reducing VAT on fuel bills.
But Dr Bhattacharya argued such measures are flawed and a one-off payment would be more useful.
The payment system could have been based upon the US stimulus check system, which was created during the coronavirus epidemic.
He said it could be spun by the Government as ‘Boris’s Bill Buster’ or ‘Rishi’s COLA (Cost of Living Assistance)’.
Dr Bhattacharya said: ‘The coming cost of living crisis leaves millions of households facing severe hardship, and many millions more feeling significant pressure on their finances.
It is evident that actions are needed. However, the Government must avoid complicating its responses and confusing its environment goals with subsidies for energy.
Instead, the government should direct cash payments to families and let them decide how to best address their problems.
A “cost-of-living bonus” with a larger payment for people on lower incomes would be a great help to struggling families. It also shows that government is there for them.
The coming months will bring many financial pressures to the household.
The energy price cap is due to be reviewed in April and experts expect it to rise by more than 50 per cent
Due to high global demand, the wholesale gas price has risen at the close of 2021. Experts believe that fuel costs could rise by 50 percent in April if an assessment of the cap on energy prices is done.
In Britain, inflation rates have risen to their highest levels in 30 years.
Consumer Prices Index (CPI) inflation jumped from 5.1 per cent in November to 5.4 per cent in December – the highest since March 1992, when it stood at 7.1 per cent.
In April, a National Insurance increase to fund the NHS and Social Care is scheduled.