It would be “silly” for the government to provide more help to families struggling with energy bills before the price cap is updated this autumn, argued Chancellor Rishi Sunak.
In an interview with Mumsnet founder Justine Roberts, Sunak rejected calls to provide households with further support despite the mounting cost of living crisis and fears of energy bills rising again later this year.
He said: ” I know people are anxious about this and wondering if they are going to go up even more, and I have always been clear from the beginning we will see what happens.”
Following Ofgem’s decision to hike household energy bills 54 per cent to £1,971 per year this month, the Chancellor unveiled a £9bn rebate scheme and council tax relief, which could providing energy users with a potential £350 saving.
However, he opted against expanding financial support in the spring statement following Russia’s invasion of Ukraine, which has caused gas prices to spike amid increased fears of global supply shortages.
Prices were already elevated following rebounding post-lockdown demand across developed economies and supply chain disruption.
The Chancellor is open to providing more relief to energy users, when the next update to the price cap has been determined later this year.
He said: “Depending on what happens to bills then, of course, if we need to act and provide support for people, we will. but it would be silly to do that now or last month or the month before when we don’t know exactly what the situation in the autumn will be.”
Energy specialists Cornwall Insight recently forecast the price cap could rise a further 34 per cent to £2,599 per year – with other analysts predicting it could event hit £3,000 if wholesale prices continue to be rocked with volatility.
Mr Sunak said he had rejected the opposition call for a windfall tax on fossil fuel giants because the government did not want to put off investment in new oil and gas extraction in the North Sea.
Chancellor leaves room for windfall tax
Sunak also hinted at a potential U-turn on the prospect of a windfall tax for UK oil and gas companies.
Earlier this year, he rejected Labour calls for a one-off £1.2bn levy on North Sea fossil fuels groups, arguing it would deter North Sea investment and reduce funds for green energy projects.
North Sea oil and gas exploration and ramping up domestic renewable energy production are key pillars of the government’s recently announced supply security stratey, as the country aims to reduce its reliance on Russian fossil fuels.
However, he told Musmnet new measures could be introduced unless they ramp up investment in new energy projects.
Shell has committed to spending £20-25bn on the UK energy system over the next decade, with 75 per cent earmarked for low and zero carbon projects, plans Sunak wants the energy giant to stick to.
He said: “What I would say is that if we don’t see that type of investment coming forward, and companies are not going to make those investments in our country and energy security, then of course that’s something I would look at and nothing is ever off the table in these things.”