Rishi Sunak to unveil windfall tax as Boris Johnson shifts focus from partygate

The Chancellor is set to unveil a new £10 billion package of support to help tackle the cost-of-living crisis. It is likely to include a discount on energy bills funded by a levy on oil and gas firms on Thursday.

It comes after Downing Street was rocked by the Sue Gray report, which laid bare the raucous culture of drinking that led to lockdown breaches in Number 10.

The Prime Minister refused to resign despite accepting the “bitter and painful” conclusions of the senior official’s inquiry that revealed lurid details of partying in Government.

He said he “overwhelmingly” believes he should stay in power to tackle the nation’s challenges including the soaring costs of food and energy.

On Wednesday night, Treasury sources did not deny reports Rishi Sunak would use his announcement on Thursday to scrap the requirement to repay the £200 discount on energy bills, and could increase the level of the grant.

The Chancellor will detail his plan in the Commons as the Government seeks to draw a line under the partygate row and focus on the squeeze in living standards caused by soaring inflation.

Details of the one-off tax to fund fresh support measures were not known but opposition leaders are likely to claim a victory of sorts after it campaigned for the measure against opposition from Johnson.

Measures could include a further increase to the warm homes discount to help low-income households cope with rising energy bills.

Other measures which have been discussed include increases in the winter fuel allowance, a further cut in council tax or a VAT cut.

The need for extra help was illustrated by Ofgem chief executive Jonathan Brearley’s indication that the energy price cap will increase by a further £830 to £2800 in October.

The Times reported that the previously announced £200 loan on energy bills will be replaced with a grant that will not have to be paid back, with the discount possibly increasing to as much as £400.

Ministers have spent months criticising the idea of a windfall tax because of its potential impact on investment.

But on Wednesday a Tory source said the arguments had been “tested rigorously” within both the Treasury and wider government.

“There’s a high threshold that any package that we bring forward delivers more gain than pain, that the gain is worth the pain, that it does not jeopardise the investment,” he said.

“You don’t introduce random taxes that make the economic environment unpredictable.”

The Chancellor of the Duchy of Lancaster said the decision to unveil a new finance package is due to Ofgem’s price cap warning rather than as a distraction from the Gray report.

Steve Barclay told Sky News: “In terms of the timing, firstly we don’t control the timing of the Sue Gray report. The timing of that is shaped by the Met Police investigation.

“What we’ve always said is, in terms of the fiscal response, we wanted to see from the Ofgem guidance what the full impact would be in the autumn on families so that we can get the design of that package right.

“We’ve had that guidance this week from Ofgem. That is why the Chancellor is coming forward today. It’s also in terms of Parliament and the parliamentary timetable.”

Meanwhile, the publication of Gray’s report led to fresh questions after it emerged she abandoned her investigation into an “Abba party” in the Downing Street flat.

Gray said she judged it was not “appropriate or proportionate” to continue the “limited” progress she had made after the Metropolitan Police launched its investigation.

The force’s acting head Sir Stephen House could face questions over the saga when he appears before the London Assembly’s Police and Crime Committee on Thursday.

London Mayor Sadiq Khan has demanded an explanation into the force’s decisions after Johnson was fined over just one event, despite being pictured drinking at another gathering.

Johnson declined to implement a booze ban in Downing Street despite Gray’s findings during a period when the Prime Minister ordered the public into isolation.

She said officials drank so much they were sick, became involved in altercations and abused security and cleaning staff.

The Prime Minister told a Downing Street press conference: “I understand why people are indignant and why people have been angry at what took place.”

Pressed on whether he ever considered resigning, he responded: “I overwhelmingly feel it is my job to get on and deliver.

“No matter how bitter and painful that the conclusions of this may be – and they are – and no matter how humbling they are, I have got to keep moving forward and the Government has got to keep moving. And we are.”

Sue Gray's report has rocked Downing Street

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Tory MPs gave a muted response to the report, with the only new call to resign coming from backbencher Julian Sturdy.

A snap poll from YouGov suggested three in five Britons want Johnson to quit. But a Conservative ally of Johnson argued it would be “ludicrous” for him to resign now.

The official report said the “senior leadership” in No 10 must “bear responsibility” for the culture which led to lockdown rules being broken at a series of events in 2020 and 2021.

Gray added: “The events that I investigated were attended by leaders in Government. Many of these events should not have been allowed to happen.”

The Metropolitan Police issued 126 fines for rule breaches in No 10 and Whitehall, with the Prime Minister receiving a single fixed-penalty notice for his birthday party in June 2020.

Sturdy, the York Outer MP, said “it is in the public interest for him to resign”.

Former ministerial aide Angela Richardson said the scandal has eroded public trust in politicians and “reflects badly on us all”.

“I am clear that had this been a report about my leadership, I would resign,” the Tory MP wrote online.

Labour leader Sir Keir Starmer told the Commons the report “laid bare the rot” in No 10 and called on Tory MPs to tell Johnson “the game is up” and that it is “time to pack his bags”.

The SNP repeated calls for the PM to quit, while Scottish Tory leader Douglas Ross again changed his chance on his Westminster boss’s position.

It is Conservative MPs who will decide Johnson’s fate, and the Conservative leader apologised again at a closed-doors meeting of the 1922 Committee of backbenchers.

The inquiry’s findings include:

• Staff were drinking in No 10 until the early hours of the morning on the eve of the Duke of Edinburgh’s funeral, with the last departure recorded at 4.20am.
• Johnson joined five advisers in a “food and alcohol” event in his Downing Street flat on the evening of the announcement of Dominic Cummings’ departure as chief adviser.
• Then-proprietary and ethics chief Helen MacNamara provided a karaoke machine for a Cabinet Office gathering where one individual was sick and there was a “minor altercation” between two others.
• Then-senior adviser to the Prime Minister Martin Reynolds boasted “we seem to have got away with” a bring-your-own-booze garden party in a WhatsApp message to a special adviser.
• Johnson brought cheese and wine from his own flat to a garden gathering on May 15 2020.

The report included a series of photos, with Johnson pictured at the surprise birthday party in the Cabinet Room on June 19 2020 for which he received a fine.

He is seen with Cabinet Secretary Simon Case and the Chancellor, with sandwiches, juice and what appears to be lager. In one picture Johnson is seen raising a can of beer aloft.

Questions also remained over why Sunak and the Prime Minister were fined over the event, but Case was not.