Britain’s energy minister has said “every penny” levied on household energy bills will be scrutinised, after suppliers warned that households could face a price increase of £250 a year due to the war in Iran. Michael Shanks told MPs that the government would stand ready to provide support wherever needed, but it would not be rushed into plans to reduce costs or offer direct financial assistance.
The warning comes as the crisis in the Gulf continues to disrupt global energy supplies, with Europe’s gas prices climbing by 40% in less than three weeks. For motorists, petrol has risen by 10p a litre to more than 142p, while diesel has climbed 20p to more than 162p a litre. The UK’s biggest energy trade association, Energy UK, has called on the government to bring together a “vaccine-style taskforce” to address looming cost hikes.
Dhara Vyas, Energy UK’s chief executive, said it was still too early to tell how significant an impact the Middle East conflict would have on British bills, but added: “It is clearly sensible to prepare and ensure any intervention that might be necessary is both cost-effective and directed to help those who most need it.” Meanwhile, Keir Starmer announced £53m of support for lower-income households reliant on heating oil.
The government has faced criticism over its handling of the 2022 gas crisis, when it spent £35bn on universal energy bill support, a sum well above that offered by neighbouring European governments. Energy UK said that had support been targeted only at low- and lower-middle-income customers, it would have cost approximately £12.5bn, almost a third of the universal scheme.
UK households are protected from the recent surge in global prices until July by the energy price cap, which was set before the US-Israeli attacks on Iran. However, when the new cap is calculated, bills are likely to rise steeply, compounding record energy debt that reached £4.4bn in June last year. The spending watchdog has warned that bill payers remain exposed to another crisis, with the public accounts committee saying ministers had not put in place sufficient safeguards for the most vulnerable households.
