Britain considering loans to energy suppliers as bills soar

UK energy regulator says energy bills will jump 80 per cent to an average of 3,549 pounds a year from October



A demonstrator holds up two cards as they protest outside the British energy regulator Ofgem. — AP
A demonstrator holds up two cards as they protest outside the British energy regulator Ofgem. — AP

By Reuters

Published: Sat 27 Aug 2022, 8:05 PM

The British government’s options to support people facing sky-rocketing energy bills include handing loans to energy suppliers that could cut bills by up to 500 pounds ($587) a year, the Daily Telegraph newspaper reported on Saturday.

Britain’s energy regulator said on Friday energy bills will jump 80 per cent to an average of 3,549 pounds a year from October, spurring calls for urgent government support to households and businesses.

Finance Minister Nadhim Zahawi has prepared a range of options for government support that the next prime minister, who will take office in early September, can consider, the Telegraph said.

Zahawi told the Telegraph he had been working on a plan to help energy suppliers with loans to provide them greater liquidity in a move that could “put a downward pressure on the price cap by anywhere between (400 and 500 pounds).” The idea, previously rejected, was now “back on the table”, the newspaper reported.

Increases in wholesale prices are passed on to British consumers through a price cap, calculated every three months.

Other options being drawn up by the finance minister include freezing the price cap, increasing state benefits and a grant scheme for small businesses, the Telegraph said.

Zahawi said he was concerned that only targeting support at those who receive state benefits would leave out others including pensioners and middle-income earners who will also likely struggle to pay their bills.

Soaring energy bills, exacerbated by Russia-Ukraine war Ukraine, have driven British inflation to 40-year-highs, but Britain’s response has been hampered by the race to replace Prime Minister Boris Johnson that runs until September 5.

Liz Truss, the foreign minister and the frontrunner to replace Johnson, has said she would look at doing more to help businesses with soaring energy costs if she becomes prime minister next month.


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