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Boris Johnson warns soaring energy company bills will hurt sector | Energy industry

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Boris Johnson has warned energy companies that sky-high bills will hurt their business, speaking at a roundtable with the electricity sector where the Chancellor of the Exchequer warned that extraordinary profits were on the way Evaluation.

No new measures have been agreed to ease pressures on household bills and any details are expected to be delayed for several weeks until a new prime minister is in place.

Nadhim Zahawi met the vendors with Prime Minister and Business Secretary Kwasi Kwarteng amid tensions in government over the future of a new tax windfall.

An industry source briefed on the talks said it was clear the windfall tax is not a preferred option for ministers or power companies.

The Prime Minister’s short-term attendance at the planned meeting raised some eyebrows in Whitehall and a source suggested it was a PR exercise, adding there was not much to it that the long-planned meeting could only fit within the constitutional limits of an incumbent Prime Minister not making important budgetary decisions.

The government has faced mounting criticism for not acting now from key figures such as MoneySavingExperts Martin Lewis and former Prime Minister Gordon Brown.

New analysis from the Tony Blair Institute (TBI) has also revealed how the aid offered so far by Tory leadership candidates is unlikely to dent the rises.

Liz Truss’s plan to reverse the recent National Insurance contribution increase would allow the lowest income households to save an average of just 76p a month, he found. The same tax cut would allow the wealthiest households in the UK to earn 93% per month.

In an article for the temperaturehis rival, Rishi Sunak, said he was ready to find up to 10 billion to help households this winter, in a challenge to the foreign minister to make new commitments.

But Sunaks’ plan to cut VAT on fuel was also deemed to have little potential impact by the BIT. For a typical household, this would only represent a savings of about $14 per month.

TBI chief economist Ian Mulheirn said the proposals so far would do next to nothing to help those most at risk this winter. He added: A serious response will require the new Prime Minister to extend and expand Chancellor Sunaks’ support package. The cost will be in the tens of billions, but there is no alternative.

At the meeting, Zahawi said energy companies had agreed to do more to help people who need it most, but did not specify what that would entail. No other explicit help is likely to come until a new prime minister is in place.

Among those attending the meeting were Chris OShea, chief executive of British Gas owner Centrica, Keith Anderson, chief executive of Scottish Power, and Simone Rossi, boss of EDF in the UK.

The Treasury said all ministers stressed the need to find new ways to help vulnerable customers. The critical talks came with new predictions that Ofgem could raise the price cap to 5,038 next April, according to energy consultancy Auxilione.

Johnson, Zahawi and Kwarteng also urged companies to use their windfall profits to invest more in North Sea oil and gas and renewable energy sources such as biomass, with signs the government was watching from closely to see that the extra billions were reinvested.

A Treasury spokesman said energy bosses had been told the market didn’t always work for consumers and that extraordinarily high bills would end up hurting energy companies.

In a hint that ministers had not ruled out further taxation, Zahawi said the government was continuing to assess the extraordinary profits seen in parts of the power generation sector and the appropriate and proportionate action to be taken.

But despite Zahawi hinting overnight that an extension of the windfall tax could not be ruled out, Liz Truss, the favorite to be the next prime minister, made it clear she was not in favor to new taxation, arguing that this discouraged investment. Kwarteng, a close ally of Truss and tipped to be his choice for chancellor, also opposed windfall taxes.

In a statement after the meeting, Johnson said it would be a tough winter for people across the UK and that the government would continue to urge the electricity sector to continue working on ways to ease the pressures of the cost of living and to invest more and faster in British Energy Security.

Officials draw up a list of alternatives for whoever becomes prime minister on September 5. Liberal Democrat leader Ed Davey, a former energy secretary, said people could not wait for further support until a new prime minister is in place.

Whether it’s Johnson or Zahawi, Truss or Sunak, none of them have a plan big enough to help millions of families deal with skyrocketing energy bills. That’s why the Liberal Democrats are calling on the government to reverse energy price hikes to avert a nationwide catastrophe.

Sources

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2/ https://www.theguardian.com/business/2022/aug/11/boris-johnson-energy-firms-bills-profits-windfall-taxes

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