Downing Street considers emergency loan scheme for energy companies
Will utilities have a lifeline to stop the huge price hike? Downing Street considers emergency loan scheme for energy companies
- Downing Street is considering an emergency loan program for energy companies to avoid a significant increase in bills, it was claimed last night.
- It came as Rishi Sunak began talks with stubborn Tory backbenchers over Britain’s looming cost-of-living crisis
- Chancellor was in ‘listen mode’, speaking to groups of MPs about their concerns over potential electricity bill increases
Downing Street is considering an emergency loan program for energy companies to avoid a significant increase in bills, it was claimed last night.
It came as Rishi Sunak began talks with grumpy Tory backbenchers over Britain’s looming cost-of-living crisis.
The Chancellor was reportedly in “listening mode”, speaking to groups of MPs about their concerns about the sharp increase in electricity bills expected when the price cap is lifted in April.
The prime minister is expected to meet with Chancellor Rishi Sunak and Business Secretary Kwasi Kwarteng this week as they try to agree measures to help families struggling with their energy bills.
He also spoke to Boris Johnson on Sunday evening as pressure mounted on the government to protect families from increases expected to reach hundreds of pounds.
10 officials are said to be considering an “emergency credit facility” for businesses to help them avoid having to pay bills. But there are fears that small businesses may not be able to take on such credit risk.
Experts predict that higher wholesale prices will lead to a 50% increase in energy bills in April.
Labor last night urged Mr Johnson and his Brexiteer colleague Michael Gove to deliver on their 2016 pledge that leaving the EU would allow the UK to remove 5% VAT from national energy bills saving almost £ 90 on average bills next year.
Mr Sunak is expected to hold further meetings with Tory MPs over the next few days to discuss cost of living issues
Boris Johnson comes under increasing pressure after a new poll found that a third of Britons fear they will not be able to pay their energy bills this year due to the worsening cost of living crisis
The energy price cap is due to be revised in April and experts expect it to rise by more than 50%.
But ministers are believed to be cold on the idea because it would help everyone equally and not do enough to reduce the bills of the lowest paid.
Mr. Sunak is expected to hold further meetings with Conservative MPs over the next few days to discuss cost of living issues.
One MP said: “The Chancellor was in full listen mode. He said we’ll see something long before the April price hike… but it was necessary to ensure that all the consequences were well thought out.
Asked yesterday about rising electricity prices, Mr Johnson said: “I meet constantly with the Chancellor. I understand the pressures people face.
“This is the result of soaring world prices due to the return of the Covid economy.
“We have to help people, especially low income people. “
A government source said: “We are looking at a range of different things that are worth exploring, but we are far from making a decision.
“It’s not like the Covid pandemic where a decision has to be made yesterday. There is time – and getting it right is important.
The prime minister is expected to have further talks with Sunak and Secretary of Business Kwasi Kwarteng this week.
Conservative MP Stephen McPartland told the BBC the government should introduce “credit facilities” to help energy companies cope with price volatility. He said it would allow businesses to tap into their financial reserves as an alternative to rising bills. The BBC said Downing Street was exploring the idea.
Backbenchers have warned the Chancellor that the 1.25% increase in national insurance that goes into effect in April will increase pressure on family finances
Labor has offered to cut VAT on energy bills for a year, as well as a one-off tax on the North Sea oil and gas industry, to help support those struggling.
Today the party will bring forward a Commons motion which, if passed, would ensure parliamentary time for a bill on reducing VAT.
The party said it could come into effect alongside its plan to extend the £ 140 warm house rebate to 9.3 million people. Labor leader Sir Keir Starmer told MPs last night: ‘Labor is running the race, coming up with ideas and solutions.
“In the meantime, what are the Conservatives offering families in difficulty? Nothing. Yesterday Nadhim Zahawi [Education Secretary] was on the radio advocating poverty on behalf of the oil companies instead of focusing on the concerns of ordinary families.
Ten Ways Ministers Could Ease Pain
Boris Johnson said he and Rishi Sunak are “looking at what we can do” to cushion the blow of the planned 50% increases in electricity bills. Here are ten ways they might help:
CLOSE VAT ON INVOICES
Labor wants the 5% VAT on home energy bills to be removed, saving families around £ 90 next year on average. Ministers are cold on the approach, but it has not been ruled out.
DELETE THE GREEN LEVY
Conservative backbenchers have demanded the temporary removal of a green tax that accounts for 13% of the cost of energy bills, but ministers say it is a key part of government policy .
HEAVY TAX ON OIL GIANTS
Profits of North Sea oil and gas companies are taxed at a 30 percent corporate tax plus an additional 10 percent tax. Labor wants that stake up to 50 percent to raise at least £ 1.2 billion.
EXTEND THE REDUCTION OF HOT HOUSES
2.2 million homes are benefiting from the £ 140 for hot houses reduction on their energy bills. The ministers are believed to be considering some form of extension. Labor wants to expand eligibility so that 9.3 million households receive it.
INCREASE OTHER WINTER BENEFITS
Some retirees get £ 25 if temperatures drop or drop below zero for seven days. This could be increased, as well as the payment for winter fuel.
SET UP SERVICES IN GENERAL
Activists want to increase universal credit to help low-income households. A temporary increase of £ 20 per week ended in the fall.
FACILITATING THE COST OF SUPPLIER FAILURE
Energy companies are applying for a loan to spread the costs associated with business failures – estimated at £ 94 per customer – over a longer billing period.
A LOAN DIAGRAM
The Treasury is considering industry proposals for a much larger £ 20bn loan program to help delay all elements of the price hike.
DELAYING THE TAX INCREASE
Jacob Rees-Mogg has reportedly called for a postponement of a 1.25% increase in national insurance.
Labor has urged ministers to create a £ 600million fund to support energy-intensive businesses which are particularly hard hit by rising bills.