Rishi Sunak warned that it could not completely protect struggling households from huge bill increases, and defended its £21billion support packagewhich has handed out hundreds of millions of pounds to second home owners and wealthy pensioners.
The Chancellor also denied being pressured Boris Johnson to announce aid to those affected by the cost of living crisis to divert attention from Sue Gray’s Report partying and breaking the rules in Downing Street.
Mr Sunak was grilled by the Treasury select committee on Monday, just hours before the Prime Minister faces a vote of confidence who could terminate his mandate.
He was asked about the fairness of the new cost-of-living supports after research showed wealthy retirees were among those who would see the biggest benefits.
Labour’s Siobhan McDonagh asked how it could be fair for people with more than one property to receive multiple £400 rebates.
Mr Sunak said this was an inevitable consequence of the fact that some of the aid offered was universal rather than targeted.
A number of campaign groups had urged the Chancellor to ensure that any aid is focused on those most in need, to get the best value for money and reduce the likelihood of further fueling the inflation.
The Chancellor also told MPs the Prime Minister did not ask her to make the spending announcement the day after a damning report by senior civil servant Sue Gray was released into a number of anti-lockdown parties in the n ° 10.
He said the timing of the financial support announcement last month was a result of the Treasury having to wait until it had enough data on expected increases in energy prices this fall. .
The Chancellor said: “The way the price cap works, there is an observation window from February to August; until you’re done, you don’t know what it will be. Although there were estimates, there were no actual data.
“We couldn’t do that for the spring statement because the observation window had barely opened for the price cap, so everything could have the potential to be very mispriced.
“I’ve always said I want to strike the right balance between reassuring people and waiting for enough information to make sure it’s sized correctly.”
Mr Sunak had for weeks pushed back against suggestions from the opposition benches and economists that he should step in immediately to offer help with rising bills.
The Chancellor said last month it would be “stupid” to announce support this summer, before changing her mind.
The timing of the change of heart sparked speculation it was motivated by a desire to divert public attention from anger over the series of boozy events in Downing Street during the lockdown.
Mr Sunak also told the Treasury committee on Monday that he could not fully protect people from steep rises in the cost of essential goods.
There could be a further £800 rise in the cost of heating and electricity for an average home when Ofgem’s price cap is revised in October, taking bills to around £2,800 a year.
High energy costs have helped push inflation to 9%, its highest level in 40 years, and further increases are expected later in the year.
Mr Sunak stressed that the support measures introduced last month were “temporary” and ignored suggestions that he had left the door open for further measures.
He told the committee: “When I am asked about other measures, I always give the same answer – I wouldn’t read anything more or less into it.
“It’s that over the past two years, I have always tried to be sensitive to the economic situation as I see it and as it affects the country.
“The structure of what we’ve put together is by definition temporary, and it’s a neat, well-constructed package.”