Chancellor Rishi Sunak has u-turned and announced a windfall tax on energy giants, as he revealed a package worth more than £15billion to tackle the cost of living.

The Chancellor was forced to unveil emergency measures to tackle the impact of soaring inflation, which has reached a 40-year high.

Oil and gas companies will be charged a temporary 25 per cent levy on their profits to compensate for the record profits firms have made during the unprecedented spike.

“It will be temporary and when oil and gas prices return to historically more normal levels the levy will be phased out,” the Chancellor told the Commons.

In addition, the £200 energy bill loan announced earlier this year will now no longer need to be repaid, and the payback will be upped to £400 for all households.

More than 8 million people who receive means tested benefits will receive a one off payment of £650 from the Government, to be paid in two installments over the coming months.

Pensioners will also receive a one-off payment of £300, while those on disability benefits will get an additional £150 on top of any other payments.

Rishi Sunak sets out £15billion package to help tackle cost of living crisis