UK energy bills going up: Rishi Sunak's helpful handout for Boris Johnson

The chancellor, a potential rival to the prime minister, produces yet more billions in bid to keep voters and MPs content

Suave Rishi Sunak does not shy away from publicity. Photo: HM Treasury

In times of crisis it is UK Chancellor Rishi Sunak who comes to the rescue of Prime Minister Boris Johnson with his apparently bottomless treasure chest.

On Thursday, he stepped forward to address how the UK government intends to ease the burden of the global energy crisis.

It was a headline-grabbing money giveaway he has performed before — though much of the cash will have to be paid back.

As businesses teetered on the edge of Covid-19 disaster when the first lockdown began in March 2020, it was the chancellor who came up with a swift £70 billion ($95.25bn) to initiate the furlough system that saved companies and jobs.

When the catering trade was on its knees in the summer of 2020, Mr Sunak stepped in with his “eat out to help out” scheme, knocking 50 per cent off restaurant bills at a cost of £840 million.

Another £16bn was also found in 2020 to meet growing global threats and bolster the Ministry of Defence’s budget.

Now, with Mr Johnson’s government facing another stern test, with a combination of soaring energy prices, health tax increases and leadership crisis, Mr Sunak has stepped forward again.

The prime minister’s moneyman conjured the cash needed to bring back voters deeply dismayed at Downing Street lockdown antics.

Surging demand for fuel to drive Asia’s economies, a summer of still weather reducing wind power, the pandemic recovery and Ukraine crisis will this year mean average British household fuel bills rise from £1,300 to nearly £2,000.

The 1.25 per cent increase on the National Insurance tax in April to raise an extra £12bn a year to ensure the National Health Service has enough money, means that voters' big concern — money in their pocket — is shortly going to be hit hard.

After months of a relatively low profile — at times uncomfortably low when Mr Johnson was suffering “Partygate” — Mr Sunak stepped forward on Thursday and dished out the cash.

“Our plan allows us to provide more generous support, faster and to those who need it most,” he told the House of Commons in an urgent statement to Parliament. “Providing 28 million households with at least £200 and the vast majority, £350. It is the right way to help people with a spike in energy costs.”

The money, part of a £9bn package, will be paid back at £40 a year over the next five years.

Furthermore, there will be a one-off £150 rebate on council taxes and “this discount won't need to be repaid”.

Hours later, he held a news conference to repeat his intention reduce the financial burden, in which he again stressed that the reasons prices are rising are global.

He said he understood that many people were “feeling anxious” but that the government was able to “take the sting” out of escalating costs.

He said: “The factors that are driving gas prices higher are global in their nature ... I don’t have a crystal ball as to what the future holds but I want to be honest with people.

“Higher energy prices are something we will have to adjust to, in common with other countries around the world and it would be wrong to pretend otherwise but what we can do is slow that adjustment to make it more manageable for people’s household budgets.”

In a carefully choreographed day, Mr Sunak, 41, spoke just before the Bank of England announced another rise in interest rates to 0.5 per cent — the first time in 18 years it has ordered consecutive monthly increases. The move is to counter the expected inflation rise to 7.25 per cent in April.

The careful co-ordination was decided at the weekend when Mr Sunak was closeted with Mr Johnson and it appeared that the prime minister was wavering over the National Insurance tax hike, in order to placate his rebellious backbenchers.

Sunak set on burnishing fiscal credentials

However, the chancellor resisted. Without the taxation he would not be able to start paying off the huge debts incurred during the pandemic. A chancellor’s fiscal reputation is everything — especially in a leadership contest.

Pre-pandemic chancellor giveaways were unusual — except before general elections — but Mr Sunak has ensured a reputation for generosity, which will not be lost on voters.

But it also meant that there was little for his Labour shadow to contest, except on Britain’s insufficient energy supply.

“It’s decades in which the Tories have slashed our gas storage capacity, leaving us more reliant than ever on Russia for our gas imports,” said shadow chancellor Rachel Reeves.

“Decades of failure to make the most of solar, tidal and wind energy and a decade of stalled progress on insulating our homes to keep bills low.”

Mr Sunak brushed aside the complaints. But his reputation is riding on the pandemic-driven but very un-Conservative tax-and-spend policy he has imposed.

It may be unpopular with many free marketeers in his own party, one of whom — MP Peter Bone — on Thursday called him “a socialist".

But it makes him popular with the electorate and will do little to dampen speculation that he could succeed the under-fire Boris Johnson as UK prime minister.

For his part, Mr Sunak shows little inclination to dampen such speculation.

Indeed, over the last few years he has carefully cultivated an image of “Brand Rishi” which individuates him from the Westminster herd.

Brand Rishi - in pictures

The latest great Mr Sunak giveaway might also help voters tick the Tory box in the May local elections.

Mr Johnson will be grateful and if survives the police investigation into Partygate, a possible confidence vote by his own MPs and the May elections, he should be thankful to his chancellor.

But this chancellor is savvy enough to understand that Mr Johnson is unlikely to return the favour. That may well be irrelevant if a leadership contest arose when Mr Sunak can seemingly lay gold at people’s feet.

Mr Sunak's handling of the cost-of-living crisis and willingness to dip into the public purse show the distinctly statist instincts he displayed during the coronavirus crisis remain.