No 10’s chief of staff has denied that the government’s decision to U-turn on not rolling out a windfall tax on energy firms is an attempt to distract from “partygate” headlines.

Yesterday’s Sue Gray report described lockdown gatherings in Downing Street and Whitehall in which some staff got so drunk they vomited, wine was spilt on walls and aides brawled.

Today the chancellor is expected to detail a £10 billion cost of living support package, following the government’s decision to roll out a windfall tax on record energy firm profits.

The government had previously refused to commit to the policy, but had not ruled it out.

The chancellor previously announced a £200 energy bill discount, after which consumers would pay back the money over five years.

The loan element has now been scrapped, but it is unclear how large the discount will be.

However it is suggested that the discount, which 28 million households may be eligible for, will be piecemeal compared to Ofgem’s predicted price climb from October when the energy price cap is predicted to jump from around £2000 to £2,800 in October.

Labour’s shadow chancellor Rachel Reeves, who has been urging for a windfall tax for months, slammed Sunak for “dragging his feet” over the policy, writing via Twitter: “Good it seems the Chancellor is finally being dragged kicking & screaming to a U turn, and four months late adopting Labour’s call for a windfall tax on oil & gas producer profits.

“Why has it taken so long?

“Why have families had to struggle and worry while he dragged his feet?”

Steve Barclay was quizzed over why the policy was changed and argued that it was not because of Labour’s proposals which he claimed would have “deterred investment” in new energy sources.
“What we have said throughout is we need to do two things. Firstly recognise that there is a huge pressure coming for families in terms of energy costs, actually there is a huge pressure now, but we can see coming to the autumn that that is going to get worse,” he told Sky News.

“So we need to be in a position to have targeted support to those families but then in terms of paying for that as we look at the balance between how much is done through debt and how much is done through revenue raising, we need to do that in a way that doesn’t deter investment.”

He also defended the fact that the government decided to coincide the announcement with the aftermath of the Sue Gray report. “I think it is because we have had the Ofgem guidance. Firstly, on the Sue Gray report we don’t control the timing of that… what we have always said is in terms of the fiscal response we wanted to see from the Ofgem guidance what the full impact would be in the autumn on families so that we can get the design of that package right, so it is absolutely logical.

“We have had that guidance this week from Ofgem, that is why the Chancellor is coming forward today. It is also, in terms of parliament and the parliamentary timetable, parliament will be off next week for the Jubilee, so it is logical before Parliament goes into a recess on the back of the Ofgem guidance this week that we then bring forward this statement.”