Will power firms get credit lifeline to stop huge surge in prices?
‘We’ve got to help low-income people’
DOWNING Street is considering an emergency loan scheme for energy firms to stave off a major increase in bills, it was claimed last night.
It came as Rishi Sunak began talks with fractious Tory backbenchers on Britain’s looming cost of living crisis.
The Chancellor was said to be in ‘listening mode’, speaking to groups of MPs about their concerns over the large rise in power bills expected when the price cap lifts in April.
He also held talks with Boris Johnson on Sunday night as pressure mounted on the government to protect families from rises expected to run to hundreds of pounds.
No 10 officials are said to be considering an ‘emergency credit facility’ for firms to help them avoid putting up bills. But there is concern that smaller companies may not be able to take on such credit risk.
Experts predict that rising wholesale prices will lead to a 50 per cent increase in energy bills in April.
Last night Labour urged Mr Johnson and fellow Brexiteer Michael Gove to stick to their 2016 pledge that leaving the EU would let the UK scrap the 5 per cent VAT on domestic energy bills, saving almost £90 on average bills next year.
But ministers are believed to be cool on the idea as it would help everyone equally and not do enough to reduce the bills of the lowest paid.
Mr Sunak is set to hold more meetings with Tory MPs over the coming days to discuss cost of living issues.
One MP said: ‘The Chancellor was in full listening mode. He said we’ll see something well before the April price rises... but there was a need to ensure all the consequences were thought through.’
Asked about power price rises yesterday, Mr Johnson said: ‘I’ve been meeting the Chancellor constantly. I understand the pressures that people are facing. This is the result of global price spikes as a result of the economy coming back from Covid.
‘We’ve got to help people, particularly people on low incomes.’
A government source said: ‘We are looking at a range of different things worth exploring, but we are not anywhere near making a decision.
‘It’s not like the Covid pandemic where a decision has to be made yesterday. There is time – and it is important to get this right.’
The Prime Minister is expected to hold further talks with Mr Sunak and Business Secretary Kwasi Kwarteng this week.
Conservative MP Stephen McPartland told the BBC the government should introduce ‘credit facilities’ to help energy firms cope with volatile prices. He said this would let firms draw on financial reserves as an alternative to increasing bills. The BBC said Downing Street was looking at the idea.
Labour has proposed slashing VAT on energy bills for a year, alongside a windfall tax on the North Sea oil and gas industry, to help support those struggling. Today the party will put forward a Commons motion which, if passed, would guarantee parliamentary time for a Bill on cutting VAT.
The party said this could come into effect alongside its plan to expand the £140 Warm Homes Discount to 9.3million people. Labour leader Sir Keir Starmer told his MPs last night: ‘It is Labour that is making all the running, offering ideas and solutions.
‘Meanwhile, what do the Tories offer hard-pressed families? Nothing. Yesterday Nadhim Zahawi [Education Secretary] was on the radio pleading poverty on behalf of oil companies instead of focusing on the worries of ordinary families.’