29 March 2022

Households likely to be on their own with energy bills until Autumn, says Sunak

The Chancellor defends his Spring Statement in the wake of internal energy rows.

The Chancellor Rishi Sunak has told MPs that there is unlikely to be any further help with energy bills before the autumn.

When questioned by the House of Commons treasury committee on Monday (28 March), Sunak said it was “very difficult” to speculate what might happen to energy prices until autumn, and as such it was not “appropriate” to take any further action before then.

The Chancellor stuck to his original line, as set out in the Spring Statement, that the government will “continue to monitor the situation” and is “prepared to act if necessary”.

Sunak’s remarks come despite evidence that the UK is facing “the biggest fall in living standards since records began”, as set out by MP Angela Eagle, who was citing analysis by the Office for Budget Responsibility.

The energy price cap will rise from around £1,300 per year to nearly £2,000 on Friday, with forecasts suggesting this may rise again to £2,800 by October. This, combined with rising food prices and bills and stagnant wages, has created an unprecedented cost of living crisis, with some experts predicting inflation will reach 8 per cent this spring.

One measure that Sunak had set out in his statement to combat rising energy prices was scrapping VAT on green materials, allowing people to save money on environmental-proofing measures, such as loft insulation and solar panels.

However, critics point out that such a move would only be applicable to wealthier households, with Christina McAnea, general secretary of trade union Unison, stating: “Cheaper solar panels won’t put food on the table for families worried about where their next meal is coming from.”

Suggested measures for further intervention to offset the cost of energy were set out by MP Caroline Lucas, who last week told Spotlight: “The moment called for a mass retrofit revolution for Britain’s homes – some of the leakiest in Europe – to reduce energy demand, slash household bills and create hundreds of thousands of jobs in the process. But instead this [Spring] Statement had a climate-shaped hole at its heart, and delivered little more than disappointment. The long called-for VAT cut on energy-saving materials, while welcome, is a measure which alone totally fails to meet the scale of the challenge we face.

“On [the] cost of living, the Chancellor’s failure to do more to protect those on lowest incomes isn’t just a crisis, it’s a scandal and a deliberate political choice. He could have introduced a windfall tax on the obscene profits of the energy companies and used it to help give real support to struggling households – but he chose not to – and his obstinate refusal to uprate benefits and drop his widely panned National Insurance rise adds salt to the wounds of the worst off.”

Sunak’s remarks come in the wake of reports of a row between Prime Minister Boris Johnson and the Chancellor over the publication of an energy strategy. The Guardian reported that while Johnson is enthusiastic about new nuclear power, Sunak is worried about the cost. Reports suggest that the strategy has been delayed for a month due to the lack of consensus within the cabinet.

Last week, Johnson told the nuclear industry that he wanted 25 per cent of electricity generation to come from nuclear power by 2050, which would sit in line with the government’s overall aim of moving away from a reliance on Russian gas.

Sunak denied rumours that he was blocking the Prime Minister’s plans, stating: “I think it’s important that we get it right. It will impact lots of different things and it is being worked on at pace between all of the relevant ministers.”