Kwasi Kwarteng prepares energy bailout amid calls for VAT cuts
Kwasi Kwarteng is rushing to craft a bailout to protect millions of households from soaring energy prices as demands rise for a reduction in VAT on household bills.
The business secretary is seeking to protect consumers from a planned increase in the energy price cap that will send annual gas and electricity bills of up to Â£ 2,000 or more from April.
Experts have warned that the increase, 56% above the current ceiling, risks pushing an additional 1.5 million households into fuel poverty without urgent action.
This was a fleet of liquid natural gas carriers from the United States to Europe in an effort to alleviate severe shortages.
Mr Kwarteng has frequently ruled out direct financial support to energy companies, but it appears he is considering a range of other interventions, including extending fuel subsidies.
Meanwhile, industry executives are calling on the government to remove the 5% VAT on household energy bills originally imposed by Brussels when Britain was part of the European Union.
The tax, which Boris Johnson and Michael Gove pledged to remove after Brexit in a Sun editorial in 2016, is expected to earn the Treasury an additional Â£ 1.4bn per year if bills rise as expected.
Investec analysts estimate that the expected increase in the bill in April would add 1.8 percentage points to inflation next year without easing, suffocating families as they suffer the biggest hike in taxes for decades.
Adam Scorer, chief executive of National Energy Action, the fuel poverty charity, said: Bills for good thanks to a major energy efficiency program targeted for the fuel poor.
âAt the very least, the Treasury should use its own fiscal windfall created by the energy crisis to mitigate these catastrophic price hikes for those least able to weather the building storm. “
Wholesale natural gas prices in the UK and Europe have been climbing for months amid a global gas supply shortage, declining imports into Europe from Russia and other factors affecting energy supply such as low wind and nuclear power outages. Gas prices have increased six-fold since last summer, and analysts expect high prices to continue until 2023.