Energy bills for the average household are falling by £117 a year from Wednesday due to a 7% reduction in Ofgem's price cap to £1,641. However, there are mounting concerns energy bills could rise by £300 a year from July due to the Middle East conflict, according to multiple reports. Keir Starmer convened crisis talks with oil and banking executives, acknowledging public fears about energy bills, petrol, and food prices.
The government is reportedly raking in an additional £20 million a day through taxes and levies linked to oil and gas price rises, according to multiple reports. If fuel prices remain high for 12 months, the government will receive an extra £8 billion from VAT on petrol and taxes on gas and oil firms, including £3.5bn from the energy profits levy and £2.4bn from gas sales, The Times reported. The RAC suggested the government could earn an extra £2bn from VAT on petrol sales.
Businesses are set for painful increases in gas and electricity tariffs from April due to the Iran war and disruption to shipping routes, multiple reports indicate. Electricity costs for businesses have increased by 10% to 30% and gas prices by 25% to 80% since the conflict began, according to Cornwall Insight. Before the conflict, 93% of hospitality businesses said energy costs were impacting profitability, according to UKHospitality.
Increases to employment costs and business rates from Wednesday will cause job losses and harm business viability, warned UKHospitality. A February survey by UKHospitality found 64% of hospitality businesses said they would slash jobs and 51% cancel investment plans due to cost increases.
Families with a 55-litre diesel car face paying over £100 at the pump for the first time since December 2022, according to multiple reports. The average diesel price is 185.2p per litre, up 30% since the war started, and the average petrol price is 154.5p per litre, up 16%, the RAC said. Brits have been warned petrol prices could continue to rise over the next six months, even if the ceasefire holds, according to Good Morning Britain presenters.
Opposition parties have criticized the government's approach, with multiple reports indicating Greens want billions to subsidise energy bills, Conservatives and Reform UK want VAT removed, Liberal Democrats want renewable funding changes, and Plaid Cymru and SNP want more support. Conservative shadow chancellor Sir Mel Stride called for drilling in the North Sea to cut bills by £200, lower taxes, and deliver a stronger economy. Labour MP Polly Billington called for a global energy summit and a 'war footing' to reduce fossil fuel exposure, warning of economic pain and extremist politics.
The Treasury is working up plans for targeted support for energy bills for those who need it most if the war continues, according to two major media sources. Ministers are looking at providing support for household bills next winter, focusing on poorest households rather than universal bailout, according to two major media sources. Ministers are also working on means-testing support when the energy price cap ends in June and in the autumn, according to two major media sources.
Richard Walker urged the government to consider extending or enlarging the 5p fuel duty cut as oil prices soar. Chancellor Rachel Reeves announced the 5p fuel duty cut would be extended until end of August, then gradually return to March 2022 levels over five years. Lord Simon Wolfson said the government could adjust fuel duty to help businesses and consumers, not profit from the war. Liberal Democrat leader Sir Ed Davey called for a 10p cut in fuel duty.
I will obliterate Iranian power plants if the strait is not opened within 48 hours.
A £1 billion crisis and resilience fund is starting to help vulnerable households with soaring heating oil prices, according to multiple reports. Sir Keir Starmer announced £53 million in support for households most exposed to rising heating oil prices on Monday. Sir Keir set out a £53 million package of support for vulnerable heating oil customers, raising concerns about suppliers cancelling orders and hiking bills. Home heating oil is used by around 1.5 million British homes, mostly in rural areas, according to research. Heating oil is not protected by the energy price cap, and its cost per litre has doubled due to the stranglehold on oil leaving the Middle East since the US-Israeli war with Iran broke out, research indicates.
The Prime Minister has vowed to help some households with the rising cost of energy bills in the wake of the Iran war, according to Sir Keir Starmer. Sir Keir refused to confirm a multi-billion pound energy support package like that introduced by Liz Truss in 2022 would be put in place from July. Sir Keir said he would not make decisions on assistance with summer energy bills yet, as the next price cap review is in July and the global situation is unclear. Sir Keir said his Government would attempt to de-escalate the war to bring prices down. Sir Keir Starmer has said he is looking at every lever available to government to deal with cost of living pressures caused by the Iran war.
The International Monetary Fund said the war was reviving the spectre of the 2021-2022 gas crisis, with Italy and the UK especially exposed. Oil prices have soared toward $109 a barrel due to the Iran conflict, up from $72 before the conflict, according to multiple reports. The Resolution Foundation estimated a £500 hit for a typical family from the energy shock, dwarfing the £150 saving announced in November's budget.
Britain's military footprint in the region expanded with four more Typhoon jets sent to Qatar and a Merlin helicopter deployed, according to multiple reports. Keir Starmer welcomed the ceasefire agreement and emphasized supporting it to reopen the Strait of Hormuz. Donald Trump attacked the UK for not joining strikes on Iran, telling countries to buy from the US or take the Strait of Hormuz themselves. On Sunday, Sir Keir and Trump discussed the need to reopen the Strait of Hormuz, a vital oil shipping channel, according to research. Iran has effectively blocked the Strait of Hormuz since the US and Israel attacked the country on 28 February, research indicates.
The prime minister is chairing an emergency Cobra committee, attended by Bank of England governor Andrew Bailey and senior ministers, according to research. Housing Minister Matthew Pennycook said a range of options are being assessed, including on potential profiteering by fuel retailers. Ministers are considering giving the Competition and Markets Authority further powers to stop profiteering, according to two major media sources. Topics at the Cobra meeting include energy security and the economic impact of the crisis on families, research indicates.
A two-week ceasefire was agreed between US and Iran, but it is extremely unlikely to hold, according to Emma Murphy. US President Donald Trump said military strikes against Iranian energy infrastructure would be postponed for five days following productive talks with Iran. A Downing Street spokesperson said any reports of productive talks are welcome, adding that a swift resolution to the war is in the global interest and the Strait of Hormuz needs to be re-opened. Tehran said it would target US-linked energy sites across the Gulf region if the US followed through with its threat, according to Iranian state media.
Additional cost pressures on households beyond energy include a rise in the national minimum wage to £10.85 and the national living wage to £12.71, according to multiple reports. Prescription prices are frozen, according to multiple reports. Hikes to council tax, water, broadband, and mobile phone costs are threatening to stretch many households to breaking point, according to charities.
April was earmarked for the prime minister to advertise decisions like minimum wage increases and the abolition of the two-child benefit cap, according to multiple reports. Keir Starmer and Donald Trump had a direct conversation covering military cooperation and condolences over US service members killed, according to multiple reports. Donald Trump alleged the UK can't get jet fuel, a claim refuted by Airlines UK. Fuels Industry UK said jet fuel supply remains stable in the UK. Chancellor Rachel Reeves said any government support would be based on household income and she must be careful with fuel duty or VAT cuts to avoid pushing up inflation. Experts are predicting the price cap will rise significantly from July due to war in the Middle East, according to multiple reports. Chancellor Rachel Reeves said Treasury officials had found the money to help the 1.5 million households relying on heating oil.