Every household in the UK is to get an energy bill discount of £400 this October as part of a package of new measures to tackle soaring prices.

The poorest households will also get a payment of £650 to help with the cost of living, Chancellor Rishi Sunak said.

It follows warnings that millions could be left struggling if energy prices rise again in October as expected.

Mr Sunak said he had offered “significant support” for households who were facing “acute distress”.

The package of new measures, worth £15bn in total, will also offer more targeted help to pensioners and the disabled.

The cost will be partly offset by a 25 per cent windfall tax on oil and gas firms’ profits, which have soared in recent months.

The UK government has until now rejected the idea of a windfall tax on energy firms’ profits, saying it could deter investment in the UK.

But Mr Sunak said the oil and gas sector was “making extraordinary profits” and that he was “sympathetic to the argument to tax those profits fairly”.

He said the tax would raise about £5bn this year and be scrapped when oil and gas prices – which have surged recently – return to more normal levels.

However, in seeking a “sensible middle ground” energy suppliers will be able to apply for tax relief of 90p for every pound they invest in UK oil and gas projects.

Dr Liz Cameron CBE, Chief Executive of the Scottish Chambers of Commerce, said:

“Scotland’s businesses warned about the damaging impact that any sort of additional windfall tax on energy companies would have on the economy and our ability to secure a successful energy transition that protects jobs and communities.

“It is extremely disheartening that the UK Government have chosen to introduce this additional levy which will inevitably deter investment and make Scotland and the UK a less attractive market internationally, adding to the pressures facing the business community.

“Whilst it’s right that the Government take steps to ease the cost of living crisis this levy is a short term solution to the long-term energy challenges businesses and consumers continue to face.

“Rather than supporting investment in decarbonisation and energy security, this levy will only serve as a sticking plaster for rapidly rising bills, does little to support businesses and is ultimately a short-sighted and opportunistic policy from the Treasury.

“With yet again no additional financial support announced for SMEs, this was another missed opportunity by the Chancellor to introduce a SME energy price cap or address the rising costs of doing business that is now dragging on economic growth.”

Commenting, Ryan Crighton, Policy Director at Aberdeen & Grampian Chamber of Commerce, said: 

“Where the industry, the Chancellor and Prime Minister agree is that a windfall tax will deter investment in both the North Sea and our energy transition. All three have been repeating that mantra for months now.

“In the short-term, taking an additional £5billion from a sector already taxed at 40% will achieve very little apart from making the North Sea – already one of the world’s most mature basins – less attractive to investors. Tax and fiscal stability, above all else, are what really matter in a globally competitive investment market, and today we’ve shot ourselves in the foot.

“It is clear that the Treasury has benefited enormously already from higher energy prices, to the tune of £19million per day so far this year, and therefore offering targeted support to consumers and businesses was already within its gift, without this damaging additional tax raid, which needlessly puts obstacles in our path to net-zero and will increase our reliance on imported energy at a greater environmental and financial cost.”

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