Sunak warns of limits on government support for rising electricity prices

Chancellor Rishi Sunak warned his colleagues that there were limits to what the government could offer to curb rising electricity prices, and that the aid should focus on UK families in need.

Kwasi Kwarteng, business secretary meet with industry leaders Wednesday to discuss a number of ways to help families struggling with rising electricity prices and the financial crisis.

The options considered by the Department of Commerce and the Treasury include reducing the value-added tax on electricity, increasing the discount for affordable housing available to vulnerable families, and providing credit to energy companies to help consumers.

Industrialists acknowledged that there were all the risks involved but emphasized the need for action to support families and prevent the collapse of electricity suppliers.

More than 20 retailers have been disrupted since the beginning of August due to rising oil and gas prices.

The talks took place on Tuesday between Greg Hands, the energy minister, and industry executives, who will now meet with Kwarteng.

Sunak did not oppose the temporary exemption of 5 percent VAT on electricity bills, which the Labor party has called for.

But he secretly argued that such a move, which could cost £ 2bn a year, would not look good because it would also benefit healthy people, according to chancellor correspondents.

“There is a lot that the government can do,” said one Sunak brother, noting that electricity prices could be very high in the long run.

Sunak, who is waiting for government officials to elaborate on the proposals made by the power companies, fears full commitment as they try to repay government debt.

Asked about the rising electricity bill, Boris Johnson, Prime Minister, told a news conference Tuesday that Sunak was “concerned” about the problem. “We will do what we can to help,” Johnson added.

Johnson said in 2016 one of the benefits of Brexit is that the government will cut VAT on electricity tariffs.

But Tuesday said: “The controversy is that it is a vague weapon and you end up cutting fuel costs for people who do not need the same help.

Electricity distributors sent a statement to the government late last year and put in place measures that could reduce the amount of house bills and prevent the collapse of many companies.

The government is working against the deadline of February 7, which is when Ofgem’s supervisor will announce a new level of value proposition that will take effect from April.

Researchers have warned that the annual energy costs of 15m-plus households in Britain covered by the price could rise. and 56 percent, or about £ 720, from April.

Gas prices in the UK are selling more than three and a half times rate they were at the beginning of 2021. They also pushed up energy prices, given Britain’s heavy reliance on gas-based electricity.

One of the ways in which these companies are managed is for the Treasury Government to pay billions of pounds to energy suppliers to help them distribute the high cost of electricity and gas supplied by consumers over a number of years.

Another option is a temporary machine under it the sellers will receive remuneration from the government if the prices of gas and electricity exceed a certain level.

All of these options are being discussed, according to government statistics, but one said no one offered a “silver bullet”. Officials also warned of the idea of ​​a solution to the problem.