Sunak considers limited extra measures to tackle cost of living crisis

theguardian.com:

Rishi Sunak will take some limited action to tackle the cost of living crisis in this month’s spring statement but will reject calls to beef up his much-criticised energy bill reduction scheme, government sources say.

Amid mounting pressure from inside his own party, and with some City analysts predicting inflation could hit 10% within months, the chancellor has asked Treasury officials to draw up options for cushioning the blow for consumers.

But Treasury sources stress that the government cannot protect the public from what is a global crisis – and underline the fact that the public finances are weaker than at the start of the pandemic, when Sunak took radical steps, including the furlough scheme.

“We have dealt with one crisis that was supposed to be once-in-a-generation, and we have just walked into another one,” they said. “There’s only so much that can be done, and we’ve never seen oil prices where they are now.”

One widely mooted option would be to raise state benefits by more than the 3.1% pencilled in at last autumn’s budget, which looks set to amount to a hefty real-terms cut, given the rapid increase in inflation since.

Torsten Bell, director of thinktank the Resolution Foundation, said: “Fast-rising inflation and income falls on a scale only seen in recessions will be the defining economic feature of the year ahead. The war in Ukraine has only deepened the squeeze that households will face.

“The chancellor cannot protect the country from the economic pain that higher energy prices bring, but he can decide who bears the burden. His top priority for the spring statement should be to ensure benefits don’t fall £10bn behind the fast-rising cost of living.”

Other options could include a further cut to the universal