Cost of living – live: Borrowing money to pay energy bills could ‘spark housing crisis’

Borrowing huge amounts of money to pay people’s energy bills could spark a housing crisis, George Eustice has warned.

The environment secretary was asked on Sky News about Rishi Sunak’s plan to help people with their energy bills.

Mr Eustice said: “The problem with borrowing huge amounts of money to pay people’s energy bills is you really risk fuelling the inflationary pressure that we are already seeing.

“We have got to get inflation back under control because if we don’t get it back under control, then interest rates will rise, people’s mortgage rates will go up, and we risk a housing crisis.”

The environment secretary said inflation is a “global phenomenon” adding: “We’re never going to be able to pay everyone’s energy bill in its entirety. This is a consequence of the pandemic.”

It comes as oil company Shell reported record profits of $11.5bn, doubling its earnings in a single year while British Gas owner Centrica has seen operating profits increase five-fold to £1.34 billion as energy bills soar.

Key Points

• Borrowing ‘huge amounts of money risks fuelling inflationary pressure,’ Eustice warns

• Shell profits hit record $11.5bn doubling in one year amid soaring energy prices

• British Gas owner Centrica profits increase five-fold to £1.34 billion as energy bills soar

• Martin Lewis urges government for immediate package of support to help households

• ‘Not time for another windfall tax,’ Truss says

Shop prices rise at fastest pace on record as retailers pass on massive cost increases

Thursday 28 July 2022 18:00 , Maryam Zakir-Hussain

Shop prices are rising at their fastest pace in at least 17 years, as retailers passed on huge cost increases to consumers, according to new figures.

Prices rose 4.4 per cent in July, with food prices jumping 7 per cent, the British Retail Consortium found. It was the fastest pace of price increases since the BRC began compiling figures in 2005, Ben Chapman writes.

Staple items including butter and vegetable oils saw some of the biggest price hikes after producers were hit by huge rises in the cost of energy, fertiliser and transport, exacerbated by the war in Ukraine.

McDonald’s became the latest big-name company to announce price increases, putting up the cost of a cheeseburger for the first time in 14 years this week.

Shop prices rise at fastest pace on record with

Energy bills set to hit £500 a month in January as Russia squeezes European gas supplies

Thursday 28 July 2022 17:30 , Maryam Zakir-Hussain

Energy bills are set to triple as British households face an “almighty hit” to living standards, economists have warned.

Vulnerable households could face an average bill of £500 for energy in January 2023, with a prediction of an annual price cap of £3,850, far exceeding already gloomy predictions for rising bills made earlier this year.

The forecast, by utilities consultancy BFY Group, came as Russia took further steps to slash its gas supplies to Europe, strangling the market even further.

The country has drastically reduced gas supplies to several European states since waging war on Ukraine. The bitter conflict has upped pressure on global food, petrol and domestic energy costs.

Our economic editor Anna Isaac has more:

Energy bills set to hit £500 a month as Russia squeezes gas supply

‘Kick out the profiteers,’ Labour MP says in response to record profits for energy companies

Thursday 28 July 2022 17:00 , Maryam Zakir-Hussain

Labour MP Jon Trickett has criticised shareholders for “laughing all the way to the bank whilst workers and consumers suffer”.

The MP for Hemsworth tweeted: “There’s a clear solution with public support: Kick out the profiteers, take energy into public ownership for the benefit of all.”

Centrica/British Gas profits up by 411% to £1.34 billion.

Shareholders are laughing all the way to the bank whilst workers and consumers suffer.

There’s a clear solution with public support: Kick out the profiteers, take energy into public ownership for the benefit of all.

— Jon Trickett MP (@jon_trickett) July 28, 2022

Cost of living crisis 2022: How to cope with the rise in prices

Thursday 28 July 2022 16:30 , Maryam Zakir-Hussain

It feels like Britons have jumped out of the pan, only to fall straight into the fire as a major cost of living crisis grips the nation just as Covid-19 appeared to have abated.

With the average cost of a full tank of petrol exceeding £100 for the first time this year and totals at the till creeping up with each weekly shop, millions of people have faced an “eat or heat” choice – forced to choose between giving up a meal or heating their home.

According to the Office for National Statistics (ONS), around nine in 10 (87 per cent) of adults in Britain have reported their cost of living increased in March alone, with rising energy prices fuelling the surge.

Read on to find out how to cope with the rising prices:

How to cope with the rising cost of living

Boris Johnson takes a swipe at Sunak for saying he would cut VAT on energy bills

Thursday 28 July 2022 16:04 , Maryam Zakir-Hussain

Boris Johnson took a thinly veiled swipe at his former chancellor Rishi Sunak for announcing he would cut VAT on energy bills.

Speaking about the future prime minister, Mr Johnson said: “I’ll give you this assurance, they will continue with the same programme, cutting taxes, simplifying regulation as much as possible, taking advantage of all our new regulatory freedoms, getting rid of every encumbrance from solvency to MiFID to VAT on fuel - turns out to be easier than we thought.”

Boris Johnson took a swipe at his former chancellor Rishi Sunak for announcing he would cut VAT on energy bills, after repeatedly saying he would not cut taxes, especially on energy.

Politics latest: https://t.co/ZTbv6x8cal pic.twitter.com/sfETaT983x

— Sky News (@SkyNews) July 28, 2022

Borrowing ‘huge amounts of money risks fuelling inflationary pressure,’ Eustice warns

Thursday 28 July 2022 15:35 , Maryam Zakir-Hussain

Borrowing huge amounts of money to pay people’s energy bills could spark a housing crisis, George Eustice has warned.

The Environment Secretary was asked on Sky News about Rishi Sunak’s plan to help people with their energy bills.

Mr Eustice said: “The problem with borrowing huge amounts of money to pay people’s energy bills is you really risk fuelling the inflationary pressure that we are already seeing.

“We have got to get inflation back under control because if we don’t get it back under control, then interest rates will rise, people’s mortgage rates will go up, and we risk a housing crisis.

“So we have got to be responsible as we approach this and that’s why I think the approach he has taken, which is to make the right intervention at the right time, an initial scheme in the spring that was proportionate to the challenge we had then, an expansion to have much more money for those on the lowest incomes announced a month or so ago, and now today, a further step to help everybody with those cost of energy bills - it’s the right thing to do.

“We’re never going to be able to pay everyone’s energy bill in its entirety. This is a consequence of the pandemic. It’s a global phenomenon.”

More reaction from businesses on energy companies’ profits

Thursday 28 July 2022 15:18 , Maryam Zakir-Hussain

With news breaking that energy giants Centrica and Shell have both announced profits worth billions of pounds as the UK faces crippling energy hikes, Oliver Holmes, Head of Operations at Business Energy Claims (energy and legal experts helping businesses to recover losses from energy mis-selling) has commented:

“It is disappointing to see that O&G giants are making significant profits across the board, whilst the average person and SMEs are suffering with the ongoing cost increases.

“As energy mis-selling experts, our main concern is how the price cap can be increased by such a level that allows billions in net profit to be made? What is worse is that businesses are not protected by a cost cap and will continue to see prices rise without government intervention,” he added.

Banks ask government to pay £1 in every £9 for Covid loans

Thursday 28 July 2022 14:51 , Maryam Zakir-Hussain

Banks have claimed around £1 in every £9 that they lent out to businesses during Covid from the Government, new figures show.

The Department for Business, Energy and Industrial Strategy revealed on Thursday that £9 billion has so far been paid out to cover loans that have gone bad.

The data is still provisional and the final figures are likely to show much higher numbers.

By some estimates the Government might have to pay out to cover nearly 40% of the £77.1 billion that was lent during the pandemic.

During the early days of Covid-19, the Government launched three loan schemes to help out businesses as many were forced to close because of lockdowns.

Billions of pounds were paid out by banks.

To speed up the loans and to encourage banks to give them out, the Treasury said it would pay up if the businesses were unable to.

It would cover 80 per cent of the Coronavirus Business Interruption Loans and Coronavirus Large Business Interruption Loans, and 100 per cent of the Bounce Back Loans, which were designed for smaller businesses.

Jacob Rees-Mogg says we need to extract ‘as much as possible’ from North Sea oil fields

Thursday 28 July 2022 14:32 , Maryam Zakir-Hussain

Jacob Rees-Mogg has said “we need to be extracting as much as we possibly can from our North Sea oil fields”.

The Cabinet Office minister was asked on the BBC Radio 4’s World At One programme whether the extraordinary profits that energy companies have made should be redistributed given the pain many households are feeling on energy.

Mr Rees-Mogg replied: “I think what we need to be doing is getting more gas out of the ground, we need to be extracting as much as we possibly can from our North Sea oil fields.

“And we need to extract shale gas from the United Kingdom because if you have a strong domestic market you are less affected by the international price, which has been the experience of the United States, and you also increase energy security.

“If that is going to happen, it’s going to need investment by the energy companies, and investment is going to be much less likely if you apply retrospective taxes to them.”

On energy companies restarting dividends, he said: “Dividends go to the people in the companies who are individuals or their representative pension funds, so I think hostility to dividends is not a wise economic policy.”

‘Their greed before your need’: Zara Sultana hits out at energy companies

Thursday 28 July 2022 14:00 , Maryam Zakir-Hussain

Zara Sultana MP has criticised energy and gas companies for their significant climb in profits while millions of households in the UK face fuel poverty.

She posted on Twitter: “This isn’t a coincidence: The system is rigged to put their greed before your need.”

See the full tweet here:

Profits of Centrica (owner of British Gas): £1,300,000,000, up
500% in a year.

Energy bills: Forecast to hit £3,850 in the winter, up 200% in a year.

This isn't a coincidence: The system is rigged to put their greed before your need.

— Zarah Sultana MP (@zarahsultana) July 28, 2022

This is not the time for a ‘flaccid’ government, Martin Lewis says

Thursday 28 July 2022 13:30 , Maryam Zakir-Hussain

With an energy price cap rising to £3,500 or more, the Money Saving Expert founder said the “zombie government” must “urgently intervene” to help households with support packages.

Speaking to BBC Radio 4, he said MPs must not wait until the end of the Tory leadership contest to take action.

He dismissed the extra help promised by Rishi Sunak and Liz Truss during their leadership bids as “trivial” in the face of bills which are set to be £2,300 a year higher than they were last October.

Just done an interview on @BBCr4today. calling for Sunak, Truss & Johnson to urgently meet (they are part of same party after all) to come up with an action plan to urgently intervene in the disastrous predicted 77% energy price cap due Oct

This isn't the time for a flaccid govt

— Martin Lewis (@MartinSLewis) July 28, 2022

'More than half of British households face living in fuel poverty as annual energy bills’

Thursday 28 July 2022 13:05 , Maryam Zakir-Hussain

More than half of British households face living in fuel poverty as annual energy bills are set to increase by more than £2,500.

Socio-economic and class writer, Taj Ali, tweeted a thread on how British Gas’ Centrica’s five-fold increase in profits compares to the situation hanging over millions of UK households who are struggling with the cost of living crisis.

“Fuel poverty is where a household is living in a property with an energy efficiency rating of band D or below in a home that cannot be kept warm at reasonable cost without bringing their residual income below the poverty threshold,” he wrote, adding there is a “clear link” between fuel poverty and health issues.

British Gas owner Centrica has seen operating profits increase five-fold to £1.34 billion. Meanwhile British households face annual energy bills of £3,850, three times what they were paying at the start of 2022. This would put more than half of British households in fuel poverty.

— Taj Ali (@Taj_Ali1) July 28, 2022

Boris Johnson takes swipe at Sunak for promises to cut VAT on energy bills

Thursday 28 July 2022 12:47 , Maryam Zakir-Hussain

B oris Johnson took a thinly veiled swipe at his former chancellor Rishi Sunak for announcing he would cut VAT on energy bills.

The prime minister told the Commonwealth Business Forum in Birmingham: “We come now to the next stage in the great relay race of politics.

“I didn’t think it was meant to be a relay race, by the way, when I started.

“I can assure you that the baton is going to be passed seamlessly and invisibly to the hand of somebody else.”

He added: “I’ll give you this assurance, they will continue with the same programme, cutting taxes, simplifying regulation as much as possible, taking advantage of all our new regulatory freedoms, getting rid of every encumbrance from solvency to MiFID to VAT on fuel - turns out to be easier than we thought.”

Boris Johnson says cost of living crisis is ‘inevitable’

Thursday 28 July 2022 12:33 , Maryam Zakir-Hussain

Boris Johnson has said the cost-of-living crisis is an “inevitable” period of difficulty that the country has to “get through”.

Speaking at the Commonwealth Business Forum in Birmingham, the outgoing Prime Minister said: “I know that the pressures people are facing on their cost of living and the global inflation problems that we’re seeing, the energy squeeze, the cost of gas, every country around the world is feeling it.

“But my argument to you would be that sometimes you’ve got to go through periods of difficulty and you’ve got to remember that they are just inevitable.

“Every athlete - to pick a metaphor entirely at random - every athlete knows that you have to go through times of real strain and real sacrifice when you sometimes feel it’s not worth it if you’re going to be ready to win.

“And by the same token we in this country have to get through these difficult times, but we have to keep investing and getting ready.

“And that’s why I’m proud that this Government is engaged in the biggest ever programme - nothing like it since Victorian times - of infrastructure investment”.

‘Clearly not everyone is struggling with the energy crisis’- Friends of the Earth

Thursday 28 July 2022 12:16 , Maryam Zakir-Hussain

The news of oil and gas companies hitting record profits this morning has been meet with fury as ordinary households are being crippled by energy prices.

Reacting for Friends of the Earth, energy campaigner Sana Yusuf, said: “Clearly not everyone is struggling with the energy crisis.

“These bumper profits will be greeted with disbelief by the millions of people across the UK who are faced with rocketing energy prices.

“The government must impose a tougher windfall tax on energy firms. The bulk of these profits should be used to insulate our homes and help cash-strapped households pay for their heating this winter, rather than developing more fossil fuel projects that roast the planet.”

Four in 10 women and three in 10 men say they are struggling financially

Thursday 28 July 2022 11:56 , Maryam Zakir-Hussain

Around four in 10 women say they are struggling financially, as are three in 10 men, according to “alarming” survey findings.

Some 41 per cent of women surveyed for pensions and retirement specialist LV=’s Wealth and Wellbeing Monitor in late June said they are struggling financially, with 30 per cent of men saying the same.

Overall, more than a third of those questioned said they are struggling financially, which was the highest proportion in LV=’s quarterly survey of 4,000 people across the UK since September 2020.

Some 38 per cent said they are worried about money - a proportion which has increased every quarter over the past year - LV= said.

Martin Lewis warns of ‘huge mental and physical health risks’ due to soaring energy bills

Thursday 28 July 2022 11:40 , Maryam Zakir-Hussain

Martin Lewis has warned of the devastating impact of increasingly high energy bills on people’s mental and physical health.

The Money Saving Expert founder tweeted this morning: “The situation is hysterical. There are huge mental and physical health risks to millions from unaffordable energy and food price rises.”

It comes after Mr Lewis warned the government to take imminent action to help struggling households cope with the energy price caps that will see bills surge £2,500 a year higher than October last year.

The situation is hysterical. There are huge mental and physical health risks to millions from unaffordable energy and food price rises. You may not care about those risks, I do. https://t.co/CJVZJS0YOt

— Martin Lewis (@MartinSLewis) July 28, 2022

‘We cannot perform miracles’- Shell CEO

Thursday 28 July 2022 11:26 , Maryam Zakir-Hussain

Shell CEO Ben van Beurden has said, “We cannot perform miracles,” in response to how to lower retail oil and gas prices.

Energy and commodities columnist at Bloomberg, Javier Blas, tweeted the CEO’s comment shortly after the oil giant’s record earnings were announced.

The oil giant reported eprofits of $11.5bn, doubling its earnings in a single year.

Shell CEO Ben van Beurden goes theological when asked about ways to lower retail oil and gas prices:

"We can not perform miracles"#OOTT

— Javier Blas (@JavierBlas) July 28, 2022

Co-op Bank staff to receive £1,000 pay rise to support them with cost of living crisis

Thursday 28 July 2022 11:03 , Maryam Zakir-Hussain

Staff at the Co-operative Bank are to receive a £1,000 pay rise to support them amid the cost of living crisis in the latest move to help cash-strapped workers.

The group said around 95 per cent of its employees will be eligible for the pay rise, which will take effect in September, with only those on the highest salaries not set to benefit.

It comes after the bank already made a one-off cash payment to lower paid staff earlier this year to help them cope with soaring energy, food and fuel bills.

Firms across the banking industry - and the wider corporate sector - have been handing out cost-of-living payments and salary increases to help struggling workers, including Lloyds Banking Group, Barclays and TSB.

Details of the pay rise were unveiled in the lender’s half-year results showing pre-tax profits rebounded to £61.9 million from £21.4 million a year earlier, helped by higher interest rates boosting its profit margins.

The group said the performance was better-than-expected and it upped its full-year guidance for the net interest margin - a key measure for retail lenders.

Electricity margins could be ‘tight’ this winter, grid firm says

Thursday 28 July 2022 10:45 , Maryam Zakir-Hussain

Britain’s electricity supply might be tight at times this winter, the body that is tasked with balancing the grid has said.

The Electricity System Operator (ESO) forecast that margins might narrow significantly towards the very end of the year, but it believes it should be able to keep the lights on.

“Our operational modelling indicates that there could be some tight periods this winter, which are most likely to occur in the first half of December,” it said in a report issued ahead of winter.

Read more here:

Electricity margins could be ‘tight’ this winter, grid firm says

Chief executive of New Economics Foundation lays out three steps government should take

Thursday 28 July 2022 10:26 , Maryam Zakir-Hussain

Miatta Fahnbulleh, chief executive of the New Economics Foundation, laid out three steps the government should to confront the energy crisis.

She said: “ 1. Increase the #windfalltax on energy companies to reduce rising bills for those at the sharp end of the crisis.

“2. Fix our broken #energymarket: creating a collectively-owned provider that takes customers of bust companies & floods the market with cheaper #renewableenergy

“3. Insulate 19m homes to reduce people’s bills and carbon emissions, and keep homes warmer, with a nationwide #GreatHomesUpgrade.”

Energy company #Centrica made an additional £1bn profit in the last 6 months, whilst millions of people can't afford to heat their homes.

Our economic system is currently enabling this, but it doesn't have to be this way.

Government should:

1/ https://t.co/7ZqMXMtl1o

— Miatta Fahnbulleh (@Miatsf) July 28, 2022

Martin Lewis calls for ‘zombie government’ to take urgent action over £3,500 energy bills

Thursday 28 July 2022 10:05 , Maryam Zakir-Hussain

The government must release an imminent package of support to help struggling households cope with soaring energy bills, Martin Lewis has urged.

With an energy price cap rising to £3,500 or more, the Money Saving Expert founder said the “zombie government” must not wait until the end of the Tory leadership contest to decide on help for households.

He dismissed the extra help promised by Rishi Sunak and Liz Truss during their leadership bids as “trivial” in the face of bills which are set to be £2,300 a year higher than they were last October.

“I’ve never seen anything like this,” he said. “It’s going to throw many households into a terribly difficult financial situation that will leave them making some awful choices.”

Read more here:

Martin Lewis calls for ‘zombie government’ to take action over £3,500 energy bills

‘Not time for another windfall tax,’ Truss says

Thursday 28 July 2022 09:50 , Maryam Zakir-Hussain

Liz Truss has said it is “not time for another windfall tax” to help with the cost of energy bills.

Speaking to reporters in Leeds, the Foreign Secretary said: “What I believe is we need to keep taxes low to attract investment into industries.

“We need to turbocharge investment into the North of England, bringing more businesses and opportunities.

“The best way to do that is to keep taxes low and attract that investment into our great towns and cities, and that’s what I’m focused on.”

Asked how she would help people afford to pay their bills this winter if she became Conservative Party leader and prime minister, she said: “I understand that families are really struggling at this time, we’ve seen a rise in global energy prices.

“That’s why I would reverse the National Insurance increase, putting more money back into people’s pockets. We’ll also have a temporary moratorium on the green levy, to cut people’s energy bills.

“What we also need to do is make sure we produce more domestically produced gas, so that we are able to increase supply and keep prices as low as possible, and that’s really important as we head to net zero, using gas for our transition.”

Martin Lewis urges government for immediate package of support to help households

Thursday 28 July 2022 09:30 , Maryam Zakir-Hussain

An urgent package of support to help households cope with soaring energy bills should be thrashed out by Boris Johnson, Rishi Sunak and Liz Truss, a consumer champion has demanded.

Money Saving Expert’s Martin Lewis said the “zombie government” must not wait until the conclusion of the Tory leadership contest to decide on help for households who will face the energy price cap rising to £3,500 or more.

He dismissed the extra help promised by Mr Sunak and Ms Truss during their leadership bids as “trivial” in the face of bills which are set to be £2,300 a year higher than they were last October.

“I’ve never seen anything like this,” he said.

“It’s going to throw many households into a terribly difficult financial situation that will leave them making some awful choices.”

He told BBC Radio 4’s Today programme the data that informs the price cap suggested it would increase 77% on top of a 52% rise in April, taking the typical bill to £3,500 a year.

“Others say it will be higher,” he warned.

“We are expecting it to rise again in January.”

Mr Lewis said the choice facing the Government was “you either have to cut prices for people or you have to put more money in their pockets, especially at the poorest level”.

But he added: “The problem is we have this zombie government at the moment that can’t make any big decisions.”

(PA)

British Gas owner Centrica profits increase five-fold to £1.34 billion as energy bills soar

Thursday 28 July 2022 09:20 , Maryam Zakir-Hussain

British Gas owner Centrica has seen operating profits increase five-fold to £1.34 billion as energy bills soar.

The company’s profits for the six months to the end of June were a substantial increase on earnings compared to the £262m recorded in the same period last year.

The energy giant announced it would be reinstating its dividend at 1p per share this year after suspending it for three years.

Group chief executive Chris O’Shea reportedly claimed Centrica’s profits were not down to customers’ rising energy bills.

My colleague Chiara Giordano reports:

British Gas owner Centrica profits increase five-fold as energy bills soar

Shell profits hit record $11.5bn doubling in one year amid soaring energy prices

Thursday 28 July 2022 09:18 , Maryam Zakir-Hussain

Oil company Shell has reported record profits of $11.5bn, doubling its earnings in a single year amid surging energy prices.

This is up from $5.5bn in April-June 2021- marking a $6bn increase in profits- and up from $9.1 billion in the first quarter of 2022.

The oil giant recorded a fourteen-fold increase in quarterly profits earlier this year which had reignited calls for a windfall tax to relieve the burden on struggling families during the worsening cost of living crisis.

Shell profits double in one year amid soaring energy prices

Thursday 28 July 2022 09:16 , Maryam Zakir-Hussain

Welcome to The Independent’s Energy Price live blog, where we will keep you up to speed with all the latest updates today.