Prices crisis

Ministers to meet energy bosses over rising bills

Nadhim Zahawi at Treasury
Meeting: Nadhim Zahawi

Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng will meet the heads of energy companies to discuss soaring prices.

The meeting comes as businesses are facing possible closure and households are being forced into debt they will struggle to repay.

Analysts at Cornwall Insight said average bills are set to soar to about £3,582 in October, from £1,971, before rising to £4,200 next year.

At the end of this month the energy regulator Ofgem will raise the price cap – the maximum amount suppliers can charge customers for average energy usage in England, Scotland and Wales. However, there is no price cap on the amount companies must pay.

Ministers will hold talks with companies amid concern that they are making huge profits while customers suffer. They will be asked to submit a breakdown of expected profits and payouts as well as investment plans for the next three years.

The energy profits levy – announced by former Chancellor Rishi Sunak – could raise up to £5 billion but does not come into effect until 26 May next year. It means profits currently being earned will not be subject to the extra tax.

Companies such as BP, Centrica and Shell are benefiting from the rise in oil and gas prices which rose partly because demand jumped as the world emerged from the Covid pandemic, but more recently because of supply constraints following Russia’s invasion of Ukraine.

The companies argue that the total tax take of 65% will hit their investment plans, including strategies to make the switch to renewable sources. They also say that higher profits mean they already pay substantially more in taxes and that they must adjust their spending when oil and gas prices are low.

Energy prices have emerged as a key issue in the Tory leadership battle. Liz Truss has dismissed calls for immediate support for families, while her rival Rishi Sunak has warned that not doing so would see voters reject the party at the next election.

Boris Johnson has so far refused to intervene and the Government said it has already promised £400 to every household and extra help for the more vulnerable.

On Monday, Scotland’s First Minister called on Mr Johnson to reschedule a proposed meeting between the heads of the UK’s devolved governments from September to this week to address the cost-of-living crisis. Former Labour leader Gordon Brown said there should be a Cobra-style meeting.

Citizens Advice said it has helped more than 47,000 people with energy debts so far this year. The average debt amount was more than £650, the charity said.

Comparison site Uswitch said almost a quarter of households owe £206 on average. It expects bills to increase much more sharply in January, with the average household paying £355 a month, instead of £164 a month currently.

Consumer expert Martin Lewis has called on what he described as the “zombie” government to “wake up” and put together a plan immediately.

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