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Brits will receive a £400 discount towards their energy bills after Rishi Sunak ripped up plans to force people to pay back help.

The Chancellor announced that the grant would double from £200 to £400 for all households – and would no longer be repayable – as part of a package to help with the spiralling cost of living crisis.

In a statement to MPs, Mr Sunak also said over eight million households on means-tested benefits will receive a one-off £650 payment, made in two lump sums, with one in July and one in the autumn.

Pensioner households who receive the winter fuel allowance will also get an additional £300 one-off payment and people who receive non-means tested disability payments will get an extra £150.

Mr Sunak also announced a £500 million increase for the Household Support Fund, delivered by councils, extending it from October until March next year.

The measures will be funded by a 25% windfall tax on extraordinary profits of oil and gas giants – in a major U-turn by ministers.

Mr Sunak said the sector was making “extraordinary profits” due in part to surging global gas prices triggered by the war in Ukraine.

Chancellor Rishi Sunak set out new cost of living plans in the Commons on Thursday ( Getty Images)

He said he was “sympathetic to the argument to tax those profits fairly” and announced a “temporary targeted energy profits levy”, which will be phased out when oil and gas prices return to normal levels.

Mr Sunak said the £5billion-a-year plan would include a 80% “new investment allowance” to incentivise the reinvestment of profits by fossil fuel giants.

The idea, designed to calm nervy Tories, would include tax relief for North Sea firms’ investment to save them 91p for every £1 they spend.

The Chancellor was forced to unveil £15 billion in emergency help after inflation rocketed to a 40-year high, bringing soaring costs for Brits.

The Government has been resisting calls for an emergency Budget for weeks after Mr Sunak’s Spring Statement in March was widely regarded as too stingy in the face of the cost of living crisis.

Shadow Chancellor Rachel Reeves said Mr Sunak had finally woken up to the pressures facing families – and said Labour was “winning the battle of ideas in Britain”.

“Today, it feels like the Chancellor has finally realised the problems the country are facing,” she said.

“We first called for a windfall tax on oil and gas producers nearly five months ago to help struggling families and pensioners. Today, he has announced that policy but he can’t dare say the words: it’s a policy that dare not speak its name with this Chancellor.”

Shadow Chancellor Rachel Reeves

She said it had taken the Government too long to realise that Mr Sunak’s “buy now, pay later compulsory loan scheme” was unfair.

“It shouldn’t have taken a rocket scientist to work out that this wouldn’t cut and we pointed it out at the time,” she said.

It comes after Ofgem’s chief executive Jonathan Brearley warned that the energy price cap on household bills was likely to increase to an eye-watering £2,800 in October.

The maximum amount firms can charge people on default tariffs has already risen by an average of £693 since April.

Mr Sunak told MPs: “This government will never sit idly by whilst there is a risk that some people in our country might be set so far back they might never recover.

Cost of Living

Our Cost of Living team of experts are here to help YOU through a very difficult year.

They’ll be bringing you the latest money news stories and also providing specialist advice.

Whether it’s rocketing energy bills, the cost of the weekly shop or increased taxes, our team will be with you all the way.

Every Thursday at 1pm they will take part in a Facebook Live event to answer your questions and offer their advice. Visit facebook.com/dailymirror/live to watch. You can read more about our team of experts here.

If you have a question – or want to share your story – please get in touch by emailing webnews@mirror.co.uk.

“This is simply unacceptable. And we will never allow it to happen.”

IFS director Paul Johnson tweeted: “Big, expensive package from Rishi Sunak.

“In conjunction with tax rises already in place this is hugely redistributive – taking from high earners and giving to the poor.

“Promise to increase benefits and pensions by September inflation next April. Likely to be 10% or more. As expected. Big cash increase in spending.”

Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “Today’s hugely welcome announcement is a life raft for the millions of people struggling to keep their heads above water due to rising costs.”

But Greenpeace warned the tax on oil and gas companies was only a “sticking plaster”.

Ami McCarthy, political campaigner for Greenpeace UK, said: “While providing support to millions struggling with sky-high energy bills is 100% the right thing to do, by only skimming the top 25% off oil and gas company profits Sunak has missed a huge opportunity to tackle the root cause of the cost of living crisis and the climate crisis together.”

She said taxing full profits to 70% could have doubled the cash in the Treasury’s coffers, which could have been used to make homes more energy efficient.

“Instead of driving money into clean energy solutions, Sunak has used this announcement to encourage oil and gas company investments,” she said.

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