Cost of living: No option is off the table, says Boris Johnson

Boris Johnson says "no option is off the table" to tackle rising living costs as pressure grows to impose a windfall tax on oil and gas firms.

The policy, as proposed by opposition parties, would see a one-off levy on company profits, with proceeds used to support hard-hit households facing surging bills.

The prime minister said he was "not attracted intrinsically to new taxes".

But he said the government was "going to put our arms round people" to help.

Mr Johnson told reporters: "There is more that we are going to do... you'll just have to wait a little bit longer."

Labour leader Sir Keir Starmer said part of the answer to tackling the cost of living was a windfall tax and it was "staring the prime minister in the face".

He said ministers needed to address the situation, adding: "Every day they dither and delay, more people are struggling, really struggling, with their bills."

Earlier, the chief secretary to the Treasury, Simon Clarke, told BBC Radio 4's Today programme he was not "philosophically attracted" to a windfall tax, but he could not rule it out.

He insisted the government would be pragmatic, and added that it was "looking at the situation with real urgency and intent".

A windfall tax is a one-off tax imposed by a government on a company or group of companies - the idea being is to target firms that were lucky enough to benefit from something they were not responsible for - in other words, a windfall.

Labour, the Liberal Democrats and the SNP have all called for a such a levy on oil and gas firms, which have seen record profits since the economy restarted after the pandemic.

The parties said the money could be used to support those worse affected by the rising cost of living, with bills for food, fuel and energy rocketing, and inflation hitting a 40-year high.

The government had initially rejected the idea, warning it could deter investment from energy companies into the UK.

But as costs continue to rise - and another energy price hike looms in the autumn - the language from Downing Street has softened, with both the prime minister and chancellor leaving the policy on the table.

A number of Conservative backbenchers have also come out in favour of a windfall tax, increasing pressure on the government to act - with former Treasury minister Jesse Norman telling Today it was needed in these "extraordinary times".

Asked if a windfall tax went against Conservative values, Mr Johnson said: "I don't like new taxes."

He added: "No option is off the table, let's be absolutely clear about that.

"I'm not attracted, intrinsically, to new taxes.

"But as I have said throughout, we have got to do what we can - and we will - to look after people through the aftershocks of Covid, through the current pressures on energy prices that we are seeing post-Covid and with what's going on in Russia and we are going to put our arms round people, just as we did during the pandemic."

The PM pointed to support on offer already, including £9bn of funding targeted at energy bills, saying the government was providing a "continuing stream of effort to shield people".

After that once in a century pandemic and the colossal economic intervention that followed, now the question is about this almighty economic crunch and what to do about it.

What we are seeing in public - and it rages in private too - is philosophy and ideology smashing into reality. In other words Conservatives instinctively don't like windfall taxes appropriating the profits of a sector that has just happened to do very well.

But the energy companies have had a genuine windfall, and senior figures in government are pretty grumpy that in various meetings with the oil companies, they just don't seem to get it - they have raked in enormous profits and not really helped themselves, as someone put it to me last night.

So this U-turn looks increasingly likely, but there is some hesitation in grabbing the handbrake - there is a discussion on whether to do it, how to do it, when to do it and then what to do with the money that's raised.

Plus there is a nervousness too that it is it not a panacea - that if it happened, people would be back at the government's door next week saying, 'what are you going to do next?'.

There is a battle going on internally between pain relief, as it is described - short-term fixes that can help people right now; and what is seen as surgery - boosting the economy for years to come, with an argument that if you spend a pound now, you can't spend that pound again on a new train line or power station later.

The government is also facing calls from a former Conservative Party leader to increase universal credit in line with inflation.

Sir Iain Duncan Smith told BBC Radio 4 that the biggest problem the country faced was a recession which would "hit the poorest the hardest".

And he criticised the Treasury's "group think" for delaying the support that was needed.

Senior Tory backbencher Bernard Jenkin went even further, calling for a £13.5bn package of support to ease the cost of living crisis - including reviving the £20 a week uplift to universal credit that was introduced in the pandemic.

He told BBC Essex on BBC Essex that he did not believe "the Labour party or the Treasury yet get how serious this crisis is".

Treasury minister Mr Clarke said the government had already taken "decisive action" on universal credit by changing the taper rate - the amount lost by working claimants if they earn more money.

But he ruled out the return of the £20 uplift.