People earning around £45,000 a year, as well as those on benefits, could need government help to pay their energy bills this winter, the chancellor has said.
Britain’s energy industry regulator Ofgem confirmed on Friday an 80% increase in the consumer price cap from October which will take the typical household gas and electricity bill from £1,971 to £3,549 a year.
In an interview with the Daily Telegraph, Nadhim Zahawi said things would be “very difficult” for middle-income earners as well as the most vulnerable in society.
All households in England, Scotland and Wales are to receive a £400 discount on their energy bills over the next few months, while those on universal credit and other benefits will receive £650.
Zahawi said: “My concern is that there are people who are not on benefits. If you’re a senior nurse or a senior lecturer on £45,000 a year, your energy bill will go up by 80% and probably more the new year is very difficult.
“If you are a pensioner, it is very difficult. So universal credit is a really effective way of targeting, but I’m looking at what else we can do to make sure we help those who really need help. We are looking at all options.”
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Charities have warned the rise could “completely wipe out” the incomes of the poorest households, leaving millions with the threat of bills they can’t pay or the choice between heating and food this winter.
On Friday, Zahawi said Britons should consider cutting back on energy consumption in light of the huge rise in bills they will face due to the new energy price cap.
Conservative leadership candidates Liz Truss and Rishi Sunak have pledged support, but neither has detailed how they plan to do so.
The foreign secretary, who is the favorite to be the next prime minister, has promised “decisive action” to offer “immediate support” if she wins the keys to No 10.
But she has so far been vague on what form that assistance might take, apart from cutting green fees on energy bills and reversing the controversial rise in National Insurance.
She has argued that it is not “right” to announce her full plan before the contest is over or that she has seen all the analysis being prepared in Whitehall.
His rival, Rishi Sunak, has said he will offer additional support aimed at the most vulnerable.
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Zahawi has said he is “full-fledged” working to draw up options for an action plan for the next prime minister so they can “hit the ground running” when he takes office in September.
But he refused to rule out freezing the energy cap, as suggested by Labour, insisting that “nothing is off the table”.
He said: “My concern is that it’s universal. You’re helping wealthier households, like mine, where we can bear the extra pressure of high energy costs, and that robs you of the ability to be resilient in the long term.
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“It would be around £100bn in around 18 to 24 months. If I targeted that help, I could provide more help to the most vulnerable.”
It also said it is weighing potential actions to help small businesses, including Covid-style cuts to VAT and business rates, to support the hospitality and leisure sectors.
“If we don’t help these small and medium-sized businesses, my concern is the ripple effect, the long-term ripple effect on the economy,” he said.
“So what did we do with business rates, what did we do with VAT for specific sectors like hospitality. So we’re working through all those options to look at them.
“And of course Liz Truss has been talking about removing a moratorium on green rates for a couple of years. We’re also looking at that, which will help everyone by around £150.
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Another option on the table is to grant large loans to energy suppliers to help reduce bills by up to £500 a year, the Daily Telegraph said.
Labor has argued that its own plan to freeze energy bills this winter would save someone on the minimum wage more than £40 a week.
But the cost of its proposals has been questioned by fact-checkers, who said the party failed to take into account that people use more energy in winter, leading it to underestimate the cost of the plan by at least £5,000 million pounds
Labor sources questioned the Full Fact charity’s analysis and said the party had costed its plans based on consultation with Ofgem.
Ofgem chief executive Jonathan Brearley said the incoming prime minister and new cabinet should “provide an additional and urgent response to the continued rise in energy prices”.