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Rishi Sunak Could Intervene On Soaring Energy Bills Next Month To Ease Cost Of Living Crisis

Chancellor Rishi Sunak is holding a series of meetings this week with Tory MPs about measures to tackle the incoming cost of living crisis (Alamy)

3 min read

The Chancellor has hinted he is planning on intervening on energy bills ahead of the price cap announcement in February as he tries to deflect criticism over the looming cost of living crisis.

There is growing anger within the Conservatives that Downing Street is “sleepwalking into this crisis" at a time when the party is already taking a hammering in the polls over the lockdown parties scandal. 

The Treasury has invited backbenchers to a series of meetings this week to discuss what support is being offered to households.

Rishi Sunak is said to have told Tory MPs at a meeting on Monday that the government is looking to try and act before the regulator Ofgem confirms how much gas and electricity tariffs will increase and help soften the blow.

PoliticsHome understands Sunak suggested he hopes to make an announcement before the Commons breaks up for half-term recess on February 10, which would coincide with the Ofgem announcement.

Around 60 MPs attended Monday's event, at which the Chancellor appeared virtually. Sunak is reported to understand the need to expand existing schemes to alleviate the impact of rising living costs in April, when people will start to pay a higher rate of National Insurance, as well as the energy price cap rise coming into force.

He asked MPs to give him time to come up with a plan that was targeted at those who are most in need of it, after calls last week to cut VAT on fuel bills and remove environmental levies on energy were dismissed by Boris Johnson as “a bit of a blunt instrument”.

The new cap on how much gas and electricity providers can charge customers won't come into force until April, but the amount by which it will go up by – which utility firm bosses are warning could easily go from £1,277 to above £2,000 – will be confirmed on 7 February.

Options believed to be under discussion to mitigate the increase include an extension to the winter fuel payments scheme, as well a further extension of the Warm Homes Discount, which provides £140 a year to around 2.2 million people.

One Tory MP criticised the potential delay such a move would take in further means-testing, and said they were pressing the government on announcing a universal benefit to all consumers.

Although the cut to VAT appears to have been ruled out, despite Johnson being in favour of such a move previously, the plan to reduce the green levies – that can form as much as a quarter of consumer electricity bills – is believed to still be on the table.

Temporarily removing them was proposed by the Conservative Environment Network, which includes 116 MPs, and was endorsed by the Energy Efficiency Infrastructure Group of businesses and charities.

It was also backed by a group of 20 Conservative politicians in a letter to the Prime Minister, signed by Craig Mackinlay, chairman of the Net Zero Scrutiny Group of Tory MPs, former work and pensions secretary Esther McVey, and ex-ministers Steve Baker and Robert Halfon.

But the Department for Business, Energy and Industrial Strategy (BEIS) is said to be opposed to removing any of of the levies, which include the Renewable Obligation and the Contracts for Difference, which incentive and support renewable electricity generation, the Feed in Tariff to support solar panel installations, and the Energy Company Obligation, which has provided energy efficiency measures to more than two million households.

“We recognise people are facing pressures with the cost of living, which is why we are taking action worth more than £4.2billion, and supporting vulnerable households through initiatives such as the £500million Household Support Fund, Warm Home Discount, Winter Fuel Payments and Cold Weather Payments,” a government spokesperson said. 

They added they will “continue to listen to consumers and businesses on how to manage the costs of energy”.

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