Former Conservative leader Sir Ian Duncan Smith has called for benefits to be increased immediately in line with inflation to help the poorest cope with the cost of living.
The Tory MP also called for a reduction in workers’ taxes to help the “tight environment”.
“During this leap, we need to make sure that we provide those benefits that are relevant to those people who need to be able to afford to pay bills that will be higher,” he said. Duncan Smith for Sky News.
Universal credit and other benefits rose 3.1% last month, in line with consumer price inflation last September.
This week, inflation peaked at a 40-year high of 9% in the 12 months to April.
Against the backdrop of spiraling prices, the government is under pressure to take further action, splitting over the potential for raising money through an “unforeseen tax” on oil and gas companies’ profits.
The Sunday Times reported that the chancellor was “attracted” by the idea of a “pro-investment” form of tax, which would offer different tax rates depending on how much a company was willing to invest in the UK.
A source from the Ministry of Finance cited previous comments made by Rishi Sunak, in which he said there were no options, provided they lead to “significant investment back into the UK economy” and support “energy security”.
But there is hostility to the government’s “contingency tax” idea, with several cabinet ministers known to oppose the idea.
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3:28 Cost of living: How bad is it?
The Tories are divided into the following steps
Former Tory Secretary John Redwood told Sky News that a “Labor contingency tax” is not necessary because oil and gas in the North Sea “already pay double tax”.
He called on the Ministry of Finance to use the increased VAT revenues to increase benefits and reduce wider tax rates.
Another former minister said the “instinct” for many in the Conservative Party would be to help people by cutting taxes, but also acknowledged that “it can turn upside down” given the direct interventions carried out during the pandemic. .
A newer lawmaker said he sympathized with the idea of increasing payments, but said it could only happen “if the economy is strong enough to pay for it” and added that it would not happen “if we have taxed him to death. “
Read more: Four graphs that explain what is happening with inflation
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6:13 Why precious energy affects everything
The government is already giving £ 150 in municipal tax rebates to many homes and will take £ 200 from energy bills from October.
Sir Ian’s comments came when the think tank he founded, the Center for Social Justice, called for benefit rates to be reviewed quarterly rather than annually, and for tax cuts for working people claiming Universal Credit.
Last week, the chancellor said he was unable to increase payments by more than 3.1% due to an old computer system used by the Ministry of Labor and Pensions.
Read more: Five things that could alleviate the cost of living crisis
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3:34 The cost of living crisis: Five solutions
The Institute for Fiscal Research’s economic think tank suggests that the poorest households may face 10.9% inflation.
This is higher than average because they spend most of their money on heating and lighting their homes.
A source from the Ministry of Finance cited previous comments made by Mr Sunak, in which he said he was “ready to do more” and that he was “learning more” about what is happening in the economy every week.
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