Chancellor Rachel Reeves announced that the UK government is planning to help those who need it most if energy bills increase due to the US-Israel war with Iran.
The government's contingency planning is underway for every eventuality, as the full impact of the war on the UK economy remains uncertain. Energy bills for millions of people in England, Scotland, and Wales are set to fall for three months from April under Ofgem's price cap.
However, there is likely to be a significant jump in gas and electricity costs over the summer, prompting calls for government intervention. A fifth of the world's oil and liquefied natural gas usually moves through the Strait of Hormuz, which has been blocked since the conflict began.
Government Support Plans
Reeves stated that any package of support would be constrained by the government's borrowing rules and its wish to keep inflation and interest rates "as low as possible". The chancellor's comments suggest that support will not be universal, but rather targeted at those who need it most.
The Treasury has calculated that the top 10% richest households received the biggest support under the Energy Price Guarantee, averaging £1,350. Reeves said the government is working with the Department for Work and Pensions to ensure support goes to those most in need.
Response from Opposition
Shadow Chancellor Sir Mel Stride accused Reeves of leaving the UK economy "in tatters". He questioned the government's fiscal capacity to support those in need, saying "We are getting poorer and our economy is increasingly fragile".
Anti-Profiteering Framework
The chancellor also announced a new anti-profiteering framework for the Competition and Markets Authority, which will have powers to tackle companies that exploit price rises. Companies that breach competition or consumer law may be fined by the CMA.
The price of petrol has reached an 18-month high since the Middle East conflict broke out, according to the RAC. The watchdog is currently gathering evidence on whether fuel providers are profiteering.
