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Time to look at energy consumption amid soaring bills, says Chancellor

·5-min read

Households need to look at how they are using energy, the Chancellor suggested amid calls for urgent Government intervention to tackle soaring bills.

It comes as outgoing prime minister Boris Johnson predicted a “tough” few months ahead – but promised energy prices will eventually come down amid grim predictions about the impact the 80.06% rise in the price cap will have on millions of the poorest households across the UK.

Nadhim Zahawi, who is likely to be out of a job in the coming days if Liz Truss wins the keys to No 10, stressed on Friday that the Government is not paralysed by the Tory leadership contest and is focused on preparing options for whichever candidate emerges as the winner.

The Chancellor told broadcasters help from the Government is coming, but admitted: “We know that’s not enough. We’ve got to do more.

“We need to make sure that this isn’t a sticking plaster, that for the long term we continue to help the most vulnerable who have no cushion, and that’s what I’m determined to do.

Boris Johnson visit to medical centre – Surrey
Prime Minister Boris Johnson posed for photographs as he met members of staff at the South West London Elective Orthopaedic Centre on Friday (Kirsty Wigglesworth/PA)

“And we’re working up those options for both households and for business for the incoming prime minister on September 5 to take those decisions.

“So my message today is, ‘We’ll get this £37 billion to people to help them for now, and then more will be coming because we know this will continue in January and, of course, on to April and next year and we have to remain resilient’.”

Mr Zahawi also acknowledged that it is perhaps now the time to give greater heed to how we use energy.

“The reality is that we should all look at our energy consumption. It is a difficult time. There is war on our continent,” he said.

This week, Mr Zahawi has been meeting with bosses from generating firms including Orsted, Newcleo and RWE to discuss what more the industry can do to ensure markets function effectively for consumers.

The Treasury said the Chancellor had been “clear” that the companies “need to do more to support their customers”, instead of relying on behaviour changes or expecting the Government alone to help people.

The firms acknowledged the industry “will need to make a contribution to ensure consumers are supported as energy prices rise”, the department said.

Mr Johnson, entering his final few days in office, said the Government has a “big, big package of help and support”.

“There’s a pipeline of cash coming through over the next few months and through the autumn and the winter,” he told broadcasters during a trip to the South West London Elective Orthopaedic Centre in Surrey.

“But that is clearly now going to be augmented, increased, by extra cash that the Government is plainly going to be announcing in September.”

Mr Johnson has been accused of presiding over a “zombie Government” in recent weeks, with the promise of fresh help on energy bills delayed until a new prime minister takes office next month.

Opposition politicians, industry regulator Ofgem and campaigners were all united on Friday in calling on the Government to intervene urgently, as charities warned that households across the country could be plunged into poverty by the soaring energy bills.

The Institute for Fiscal Studies (IFS) suggested that whoever becomes the next prime minister will be unable to avoid putting together a “substantial package of support”.

It said it is difficult to assess the impact of Ms Truss’s plan to cut green levies.

“Cutting only those levies that still add to bills would be complex as they are linked to various schemes and subsidies and apply to business as well as households, but would save households around £50 on average over the three months from October,” it said.

Rishi Sunak’s plan to cut VAT on household energy bills, the IFS said, would save a typical household £51 between October and December at a cost of £1.4 billion.

“Looking beyond this winter, energy prices also look like they will remain very high well into next year, which will put pressure on the Government to provide further support in the coming months,” IFS economist Isaac Delestre said.

“Whoever becomes the next prime minister will most likely be announcing a substantial package of support very soon after taking office.”

Cost of living
Labour leader Sir Keir Starmer did not rule out a need for his party’s own £30 billion plan to tackle the cost of living to be adjusted to a higher amount. (PA)

A spokesman for Ms Truss said on Friday that as prime minister she would “ensure people get the support needed to get through these tough times”.

Mr Sunak also told broadcasters that protecting people from rising energy bills would be his “immediate priority” as prime minister.

Labour has been vocal in attacking the proposals put forward by both candidates as failing to meet the needs of the public.

But leader Sir Keir Starmer did not rule out a need for his party’s own £30 billion plan to tackle the cost of living to be adjusted to a higher amount.

“What we’ve got is a fully costed, comprehensive plan for this winter which will freeze those prices. That is welcome news to so many people who are worried sick today,” he said.

But he added: “I accept that in April, May next year, we need to look forward then to the proposals in place.

“That’s why I’ve said, alongside our plan, we need medium and long-term solutions. We need to be much more self-sufficient when it comes to energy.”

Jonathan Brearley, Ofgem’s chief executive, early on Friday said the problem is beyond what the regulator can address by itself.

Conservative leadership bid
Liz Truss is the frontrunner in the Tory leadership contest (PA)

Appearing on BBC Radio 4’s Today programme only minutes after the price cap announcement, he accepted the news would be “devastating” for many families.

“The truth is this is beyond the capacity of the regulator and the industry to address,” he said.