Pressure is growing on the Tory leadership hopefuls to set out plans to tackle soaring energy costs after the latest forecast suggested British households face average annual bills of more than £5,000 next year.
The warning from consultancy firm Auxilione came as energy bosses met Prime Minister Boris Johnson and Chancellor Nadhim Zahawi yesterday. The talks failed to reach agreement and saw Johnson merely “pass the buck to his successor”, said The Mirror.
How to respond to surging energy prices has become a “key battleground in the contest to replace Boris Johnson as prime minister in September”, said the BBC’s politics reporter, Paul Seddon.
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What the papers said
Writing for The Times today, Rishi Sunak said he was prepared to find up to £10bn to soften the impact of this October’s price rise and cover the total cost of rising energy bills for up to 16 million vulnerable people.
“I am unequivocal that, if I enter 10 Downing Street at the start of next month, I will provide the support required to the people who need it,” he wrote. He told “parents and pensioners losing sleep about looming bills” that “I get it, I am on top of it and I have a plan to grip it”.
To fund his plan, he said, he might have to “stop or pause some things in government” and, in a change of heart, he said he was prepared for “some limited and temporary, one-off borrowing as a last resort to get us through this winter”.
Sunak’s camp “remains buoyant that he is winning the argument on the cost of living”, said Jane Merrick, policy editor of the i paper, “but it is likely to be too late to make a difference on 5 September” when the leader is announced.
Speaking at a Tory hustings in Cheltenham last night, his rival Liz Truss said she would end the moratorium on fracking. The foreign secretary said: “We need to make sure we’re fracking in parts of the country where there is local support for it.”
She rejected calls to increase the windfall tax on energy companies to fund government support for vulnerable households, saying profit is not a “dirty word”. Truss repeated that she was “absolutely” against windfall taxes.
The Telegraph cast doubt on her fracking policy, saying that “whether there would be local support for drilling to start remains unclear”. The paper’s sketch writer, Madeline Grant, added that Truss’s speech was “bigger on mood music than specifics” and featured “cryptic promises” but “rather less on solving the energy crisis”.
Truss has promised an emergency budget in September with tax cuts, including a reversal of Sunak’s 1.25 percentage point National Insurance rise, but this would “offer only £59 to someone on the national minimum wage”, noted the FT.
What happens next?
The chancellor is drawing up a list of options to tackle the economic crisis to present to the new PM, including inflating and expanding the £5bn windfall tax on oil and gas producers introduced by Sunak.
The government’s energy profits levy currently only applies to oil and gas firms, noted the BBC, and there has been speculation about extending it to electricity generators.
However, reported Bloomberg, Neptune Energy Group’s boss has warned that the UK’s windfall tax has put a “big question mark” on future investment.
A government official told Politico it was best to think of windfall taxes as a “sword of Damocles”. They added: “It’s wrong to think that [windfall tax] is the be-all and end-all – the options we are looking at are far from limited to just getting business to do stuff.”
There will also be pressure to extract more from oil and gas producers by cutting back investment allowances. However, repeated Education Secretary James Cleverly earlier this week, no “very big policy-changing decisions” will happen before Johnson leaves Downing Street in September.
