Boris Johnson has warned against capping energy bills for all households, and argued that further support packages should be targeted to the most vulnerable energy users.
The departing Prime Minister pledged that the Government will bring in “extra cash” next month to help ease soaring household energy bills.
He told Sky News: “There’s a pipeline of cash coming through over the next few months and through the autumn and the winter.
However, while Johnson argued more help was “plainly” needed, he also believed the money should be going to the most vulnerable eight million energy users.
He spoke against trying to cap prices for “the richest households in the country.”
“We shouldn’t cap prices for everybody,” Johnson concluded.
Earlier today, energy regulator Ofgem announced the price cap for an average household bill will rise to £3,549 a year in October.
This is £800 more than the forecast figure that was provided to then-chancellor Rishi Sunak in May when he unveiled a £15bn support package with £400 discounts for energy users.
Industry scrambles to tame energy bills
Johnson is set to leave office by 5 September, with Foreign Secretary Liz Truss widely expected to beat Sunak in the leadership race and be named next Prime Minister.
His critique of a full-scale cap contrasts with calls from the energy sector for a price cap freeze.
Scottish Power has called for the price cap to be constrained for two years, with suppliers taking out state-backed loans from banks via a tariff deficit fund.
This idea has also been backed by EDF, EON UK, Octopus Energy and Ovo Energy.
Meanwhile, Labour has called for a £29bn three-month price cap freeze scheme to be funded through an expanded windfall tax without the investment relief provided in the Government’s energy profits levy.
Opposition leader Keir Starmer accused the government of being “missing in action” and argued it was “unforgivable” that no further intervention has yet been made by ministers to help households amid the cost of living crisis.
There is also growing pressure on renewable groups and electricity generators operating in the North Sea to offer more support, with sustained speculation they could be added to the windfall tax.
Chancellor Nadhim Zahawi met with multiple energy generation companies this week including EDF, RWE and Xlinks.
He pushed them to invest more in the UK to increase energy supply, and warned energy companies need to do more to support their customers, rather than relying on households changing their behaviour or expecting Government to come to their aid.
Earlier this week, he wrote in City A.M. the next Prime Minister will have options available to them from The Treasury to ease energy bills.
Meanwhile, Ofgem chief Jonathan Brearley offered a partial defence of the energy price cap, following today’s announcement of a hike to household bills.
He noted it kept profit margins contained at 1.9 per cent, which was protecting households now amid soaring wholesale costs with suppliers unable to ramp up charges beyond the mechanism’s constraints.
Brearley said: “The problem is the price cap was never designed to be a mechanism that somehow – across the board – could subsidise the cost of energy for ALL customers. Ultimately, companies do have to be able to recover the cost they need to buy the energy to give that energy to their customers.”