Former Conservative leader Sir Ian Duncan Smith has called for an immediate increase in benefits in line with inflation to help poorer people cope with the cost of living.
A senior Tory MP has also called for tax cuts for those working to help the “squeezed middle”.
“During this surge, we need to make sure we provide those benefits that are relevant to those people who need to be able to pay the bills that will be higher,” Mr Duncan Smith told Sky News.
Universal credit and other benefits last month rose 3.1% in line with CPI inflation last September.
This week, inflation reached a 40-year high of 9% in the 12 months to April.
Amid rising prices, the government is under pressure to take further action, with a division on the possibility of raising money through an “unexpected tax” on oil and gas companies ’profits.
The Sunday Times reported that the Chancellor was “attracted” by the idea of an “investment” form of taxation that would provide for different tax rates depending on how much the company was willing to invest in the UK.
A Finance Ministry source pointed to Rishi Sunak’s previous comments, in which he said there were no options provided that they lead to “significant investment back into the UK economy” and support “energy security”.
But there is hostility in the government to the idea of a “tax on unexpected income.”and several cabinet ministers are known to be against the idea.
The Tories were divided into the following steps
Former Tory Secretary John Redwood told Sky News that a “Labor pay tax” is not needed because North Sea oil and gas “are already paying double the tax.”
He called on the Treasury to use the increase in VAT revenues to increase benefits and wider tax rates.
Another former minister said the “pocket instinct” for many in the Conservative Party would help people through tax cuts, but also acknowledged that “it could be turned upside down” given the direct interventions that took place during the pandemic.
The new MP said he sympathized with the idea of increasing benefits, but said it could only happen “if the economy is strong enough to pay for it”, adding that it would not happen “if we taxed it to death”.
Read more: Four charts explaining what is happening with inflation
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The government is already distributing tax rebates of £ 150 to many homes and will withdraw £ 200 into electricity bills from October.
Sir Ian’s comments came at a time when the think tank he founded, the Center for Social Justice, called for a review of benefit rates quarterly rather than annually, and for tax cuts for working people claiming Universal Credit.
Last week, the chancellor said he could not increase payments by more than 3.1% because of the old computer system used by the Department of Labor and Pensions.
Read more: Five things that can alleviate the cost of living crisis
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The Economic Analysis Center of the Institute for Fiscal Research has suggested that the poorest families may face 10.9% inflation.
This is higher than average because they spend most of their money on heating and lighting their homes.
A source in the Ministry of Finance drew attention to Mr Sunak’s previous comments, in which he said he was “ready to do more” and that he “learns more” every week about what is happening in the economy.
