Chancellor’s bright idea? Ration your energy use
As families face choosing between heating and eating after bills soar again...
FAMILIES should reduce their energy usage this winter because ‘there is a war on’, Chancellor Nadhim Zahawi said yesterday.
He became the first senior minister to warn that the crisis might require families to turn down heating and ration energy use.
Downing Street rejected the idea earlier this week, with a No10 spokesman saying: ‘These decisions, in terms of energy consumption, remain decisions for individuals.’
But, with the energy price cap jumping to £3,549 yesterday and forecast to soar above £6,000 next year, the Chancellor said Britons should consider cutting back.
Asked directly on reducing usage, Mr Zahawi referred to the war between Russia and Ukraine, which has been blamed for rocketing prices. He insisted: ‘The reality is that we should all look at our energy consumption.
‘It is a difficult time. There is war on our continent. Very few people anticipated war. Wars happen in farflung places. It is now here with us. We have to remain resilient.’
He was backed by former Labour minister Kate Hoey who said families should ‘of course’ cut back in the face of soaring bills.
She stressed: ‘Those of us brought up before central heating wore extra jumpers when winter came.’
Mr Zahawi also revealed ministers are working with the Bank of England and energy bosses on a plan to improve liquidity in the wholesale market, which could cut bills by up to £500 in future.
Volatile prices have seen traders withdraw from the market, leading to a shortage of liquidity which has pushed prices higher.
The Treasury declined to comment on how the scheme would work, but it could involve the Government or Bank underwriting part of the risk to encourage more trading.
Mr Zahawi revealed the move during a TV interview yesterday, saying he was ‘working on options’ with the Bank. He said energy firms believed the move could ‘push down the energy price cap by £400 to £500’.
The Treasury said last night that Mr Zahawi had warned energy chiefs during talks this week that they would be expected to offer more help to customers alongside any government support package.
But the Chancellor came under fire on social media, with critics pointing out he had once been forced to apologise after it was revealed he had ‘mistakenly’ claimed taxpayerfunded expenses to heat the stables on his Warwickshire estate. Jonathan Brearley, boss of energy regulator Ofgem, said soaring costs would be ‘devastating for families’ but controlling the price was ‘ beyond the capacity of the industry and the regulator to address’.
Referring to the invasion of Ukraine, he said record prices had been driven by ‘an aggressive economic act by the Russian state’ which had led to a 15-fold increase in global gas prices. He added that if petrol prices had risen by a similar amount, it would now cost up to £500 to fill a car.
Mr Brearley said when the Tory leadership race between Liz Truss and Rishi Sunak is over the new prime minister’s government would ‘need to act urgently and decisively’.
He insisted: ‘The Government support package is delivering help right now, but it’s clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year.’ Mr Zahawi said he had spent the summer drawing up options for support packages so the new PM could ‘hit the ground running’.
Ministers have already put in place £37billion of support, including £400 off bills. He added: ‘We know we need to do more because actually the most vulnerable households have no cushion, have nothing available to them. So what I’m looking at is how I can target that help for those people – not just to January ... we need to make sure that we’re resilient through next year. More help is on its way.’
Last night he indicated that help would have to be extended to middle earners on salaries of more than £40,000. He told the Daily Telegraph: ‘My concern is there are those who aren’t on benefits. If you are a senior nurse or a senior teacher on £45,000-a-year, you’re having your energy bills go up by 80 per cent and will probably rise even higher in the New Year – it’s really hard.’ He said: ‘We’re looking at all the options.’
‘We have to remain resilient’