Chancellor to intervene to ease soaring energy bills
Rachel Reeves drawing up plans to help with spiralling costs as Iran war continues
Targeted support could be offered to households struggling with soaring energy bills as a result of the Middle East crisis, Rachel Reeves has indicated.
The Chancellor said she would give support “to those who really need it”, with a package of help for people who rely on heating oil – which is not covered by the energy price cap – expected next week.
Gas and electricity bills are covered by regulator Ofgem’s price cap which is fixed until June, but if the conflict continues and Iran maintains its stranglehold on shipping in the Strait of Hormuz, then, households could face dramatic hikes at that point.
But about 1.5 million households relying on heating oil already face soaring costs, with the price per litre doubling since the start of the crisis.
In an interview with The Times, Ms Reeves indicated a subsidy package would be set out next week: “I have found the money and we’ve worked through with MPs and others a response for people who are not protected by the energy price cap.
“We’re giving greater support to those who really need it.”
There is more time to draw up a plan for gas and electricity bills, because of the price cap.
Analysts at Cornwall Insight have forecast that household energy bills could rise by 10% from July following sharp increases in wholesale gas prices.
This would mean Ofgem’s price cap for July to September surges to £1,801 a year for a typical dual fuel household – an increase of £160 or 10% on April’s cap.
“We’ve got some time, and we are working through in the Iran response board (a group of Treasury ministers and officials) different approaches that we could take, including looking at more targeted options,” the Chancellor told The Times.
“We are working through different scenarios at the moment and I don’t want to suggest that we’re going to do something that we know we’re not able to deliver.
“I am concerned given how high our debt is, the debt that we inherited, and so I want to look at what the different options available would be.”
She played down the prospect of a blanket energy bailout for households, as happened in the wake of Russia’s invasion of Ukraine at the cost of about £35 billion over a six-month period.
“It is important even when there is an economic shock — or perhaps particularly when there’s an economic shock — that you continue to be disciplined about your use of public money,” she said.
Lord Richard Walker, the cost-of-living tsar, was meanwhile asked by the BBC’s Newsnight whether soaring petrol prices are justified.
He replied: “No, because the supplies are fine, and I’ve been told that.”
The minister also said the US-Israeli war with Iran has not made efforts to tackle living costs “any easier”.
Lord Walker added: “People are quite rightly concerned. I fully understand that. What I would say is there’s been a bit of resilience that’s now been baked in to our economy.
“I think what this has done is redoubled our resolve to try and help wherever we can with the cost of living and redoubled our efforts.”
Published: by Radio NewsHub