Prime Minister Boris Johnson warned about the danger of fuelling an inflationary spiral if Government intervention was not carefully controlled.
03 May 2022
Boris Johnson acknowledged there was more that could be done to help address the cost-of-living crisis despite insisting the Government was doing “everything we can”.
The Prime Minister warned that increasing Government spending to prop up household finances could fuel inflation rising even faster.
And as BP announced soaring underlying profits despite a hit from pulling out of its Russian business, Mr Johnson warned that a windfall tax on energy firms would deter investment.
On ITV’s Good Morning Britain, the Prime Minister was challenged about the case of a 77-year-old viewer called Elsie, who has seen her energy bill soar and cut down to one meal a day.
Told that she spent the day travelling on buses to stay out of her home and keep her bills down, former London mayor Mr Johnson said: “The 24-hour freedom bus pass was actually something that I actually introduced.”
Mr Johnson said there are “plenty of things more that we are doing”, adding: “What we want to do is make sure that we have people who are in particular hardship looked after by their councils, so we are putting much more money into local councils.
“We have the particular payments to help elderly people in particular with the cost of heating.”
The Prime Minister warned that increasing state support beyond its current levels could drive inflation even higher.
There is a “global context” caused by a surge in energy prices which is hitting all aspects of the economy including food, he said, adding: “The cost of chickens is crazy.”
On energy, Mr Johnson said: “This country is in the insane position of having to take in, pipe in, electricity from France and elsewhere because we haven’t done enough to invest in our own security of energy and electricity.”
His comments came as BP group plunged to a 23 billion US dollar (£18.4 billion) replacement cost loss for the first three months of the year after its decision to ditch its near-20% stake in oil producer Rosneft, which it co-owned with the Kremlin, in response to the Ukraine war.
But, with the one-off charge stripped out, its underlying replacement cost profits more than doubled to 6.2 billion US dollars (£5 billion) from 2.6 billion US dollars (£2.1 billion) a year ago thanks to the rocketing cost of crude.
.@susannareid100 tells the PM about 77-year-old Elsie who eats one meal a day and stays on the bus all day to avoid using energy at home.
She questions the PM about the comments he made about people having to make choices about what they spend their money on. pic.twitter.com/26b7kPuBNh
— Good Morning Britain (@GMB) May 3, 2022
Under pressure from opposition politicians to impose a one-off levy on oil company profits, Mr Johnson said: “If you put a windfall tax on the energy companies, what that means is that you discourage them from making the investments that we want to see that will, in the end, keep energy prices lower for everybody.”
The Government has set out a £9 billion package of loans to cut energy bills and council tax rebates, but Mr Johnson faces calls to go further.
“I accept that those contributions from the taxpayer – because that’s what it is, taxpayers’ money – isn’t going to be enough immediately to cover everybody’s costs.”
Put to him that means the Government is not doing everything it can, Mr Johnson admitted: “There is more that we can do.
“But the crucial thing is to make sure we deal with the prices over the medium and long term.”
Challenged about benefits failing to keep pace with rising inflation, he said: “We have a short-term hit caused by the spike in energy prices across the world.
“If we respond by driving up prices and costs across the board in this country, responding by the Government stepping in and driving up inflation, that will hit everybody.
“And that will mean that people’s interest rates on their mortgages go up, the cost of borrowing goes up, and we face an even worse problem.”
