The Government is considering offering energy bill support to all British households if the war in Iran continues to drive up costs.
Energy Secretary Ed Miliband signalled that the Government was considering blanket support to help with the cost of living on Sunday, saying that ministers were “preparing for all eventualities”.
He said the decision to support all Britons, not just those on lower incomes – as happened following Russia’s invasion of Ukraine in 2022 – would depend on “the scale of the impact” of the ongoing conflict.
“How long this conflict goes on will shape what happens to the gas price and bills,” he told BBC’s Sunday with Laura Kuenssberg programme, adding that the Government would “stand by people in this crisis.”
No 10 sources echoed Miliband’s comments, saying that the question of universal support would depend on how long the conflict continues and the impact of that on rising energy prices.
They pointed to comments made by Chancellor Rachel Reeves in a recent Treasury committee appearance, that ministers would look at more targeted help for lower income families, but reiterated that the final decision would depend on how high oil and gas bills go.
It came after the US and Iran put out conflicting statements regarding negotiations to bring the conflict to an end.
Iranian Foreign Minister Abbas Araghchi said on Sunday that Tehran had “never asked for a ceasefire” in the war with Israel and the US – after President Donald Trump claimed that Iran wanted to make a deal, but that he felt the terms were “not good enough”.
“We are ready to defend ourselves as long as it takes and this is what we have done so far, and we continue to do that until President Trump comes to the point that this is an illegal war with no victory,” Araghchi told CBS News.
Help for 1.7m homes reliant on heating oil
Reeves is expected to announce a support package this week for households relying on heating oil, after disruption to shipping in the Strait of Hormuz sent prices soaring.
Around 1.7 million households in England and Wales – and almost two-thirds of homes in Northern Ireland – use kerosene for heating, which is not covered by Ofgem’s energy price cap.
In an interview with The Times on Saturday, Reeves said she had identified funding to help those households, and was also considering “different scenarios” for wider gas and electricity support ahead of the next price cap review in July.
Household energy bills are due to fall by 7 per cent in April, with the average cap set at £1,641. But the Institute for Fiscal Studies (IFS) warned last week that bills could rise sharply again when the cap lifts on 30 June.
Energy bill support for all will require tax rises
The think tank said the public finances are significantly more constrained than in 2022, warning that borrowing costs “could grow further if interest rates go up, making it harder to fund an expensive support package.”
Any additional revenue, it added, would likely require raising existing tax rates or introducing new measures.
The IFS also noted that windfall taxes on energy companies – which helped fund the roughly £75bn package introduced after the Ukraine invasion – were already built into existing spending forecasts.
Petrol prices have also climbed to an 18-month high, according to motoring organisation the RAC. Prime Minister Sir Keir Starmer warned last week that the Government would act if fuel companies attempted to exploit the situation.
Fuel duty hike could be axed
Miliband confirmed the planned fuel duty rise due in September was under review, but did not commit to a freeze.
“With five months to go until September, we’ll have to see where we are,” he said, adding: “We will stand by the British people in this crisis and we will do what it takes to do that.”
He rejected Conservative calls for new North Sea drilling licences, saying the UK was “a price taker not a price maker” on international gas markets, and that the only long-term answer was “home-grown, clean power that we control.”
Speaking on the same programme, shadow energy secretary Claire Coutinho urged the Government to adopt her party’s Cheap Power Plan – which she said would cut electricity bills by 20 per cent – saying the “first port of call should be to reduce costs” before drawing further on public funds.
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