Energy minister: ‘every penny’ levied on household energy bills will be scrutinised

Britain’s energy minister has said “every penny” levied on household energy bills will be scrutinised after suppliers warned that households could face a price hike of £250 a year due to the war in Iran.Michael Shanks told MPs that the government would stand ready to provide support wherever needed, but it would not be rushed into plans to reduce the costs faced by households or offer direct financial support.The government is under increasing pressure to commit to protecting energy bill payers from soaring energy markets as the crisis in the Gulf continues to disrupt global supplies of oil and gas.The biggest supply shock in the history of the energy markets has caused Europe’s gas prices to climb by 40% in less than three weeks. For motorists, the crisis has already caused petrol to rise by 10p at the pump to more than 142p a litre while the diesel price has climbed 20p higher to more than 162p a litre.The UK’s biggest energy trade association on Tuesday called on the government to immediately bring together “a vaccine-style taskforce” to address the looming cost hikes after suppliers warned that gas and electricity bills could climb by £250 a year.Specifically, the UK government should take steps to make sure that any support for energy bill payers is targeted to help those most in need, according to Energy UK.Dhara Vyas, Energy UK’s chief executive, said: “It is still too early to tell how significant an impact the conflict in the Middle East will have on British energy bills – but it is clearly sensible to prepare and ensure any intervention that might be necessary is both cost-effective and directed to help those who most need it.“Prioritising efforts to identify these customers is crucial for any potential emergency response and will also mean that we can ensure they are supported in the long term.”Keir Starmer announced that lower income households reliant on heating oil to warm their homes would receive £53m of government support to help with their bills.The last Conservative government faced criticism for its decision at the height of the 2022 gas crisis to spend £35bn on universal energy bills support, a sum well above the support offered by neighbouring European governments.The government scheme handed a £400 discount to all consumers in England, Scotland and Wales with an electricity connection to help households to keep up with the rocketing cost of energy but was later criticised for handing billions in public money to wealthy consumers who did not need the help.If the government had directed financial support to only low- and lower-middle-income customers, the scheme would have cost almost a third of the universal scheme at approximately £12.5bn, Energy UK said.UK households will be protected from the surge in global energy market prices until July this year by the government’s energy price cap, which was set before the US-Israeli attacks on Iran late last month.But when the new cap is calculated based on higher energy market prices, households are likely to see a steep rise in bills, which threatens to compound the record levels of energy debt amassed since Russia’s invasion of Ukraine ignited a gas supply crisis for Europe.Unpaid energy bills reached a record high of £4.4bn in June last year, an annual rise of more than £750m, according to the latest official data. These debts are partly paid down by other bill payers through an annual £52 charge included in the energy price cap.The government’s spending watchdog warned in March last year that British bill payers remain exposed to another energy crisis while facing “worryingly high” energy debts and some of the highest electricity costs in the world.The public accounts committee said ministers had not put in place sufficient safeguards to shield the most vulnerable households against another energy crisis while permanently lowering costs for all households.The chancellor promised earlier this year to cut energy bills by £150 by shifting some green energy costs away from household bills and into general taxation and scrapping a billpayer-funded energy efficiency scheme. The savings were eroded by the rising cost of maintaining the UK’s energy grids.