Millions of households will get no help on energy bills in wake of Iran war

Millions of households will get no help to pay rising energy bills and warns Iran war will create “significant” difficulties for the UK economy, Rachel Reeves has warned.

The Chancellor blasted the previous Conservative government for providing “blanket” support following Russia’s attack on Ukraine, which he said cost tens of billions of pounds.

Instead, Ms Reeves made clear that Labor ministers would offer targeted rather than universal support “to those who need it most”.

The average household energy bill is expected to rise by £332 in July as the crisis in the Middle East sends oil and gas prices soaring, hitting drivers who fill the pumps.

The Chancellor told the House of Commons on Tuesday that the overall aid offered under the Liz Truss “provided support for the wealthiest households” and “left us with high levels of national debt, a check written then for a bill that is still being paid today”.

While he stated that more targeted support would be provided, he said that this support would not be announced for another month.

Ms Reeves also announced plans to meet with supermarkets and banks later this week to discuss what help they could offer customers, while the Competition and Markets Authority is being given new powers to stop price gouging.

He told MPs: “By operating within our strict fiscal rules to keep inflation and interest rates as low as possible, contingency planning is in place for every eventuality so that we can keep costs down for everyone and provide support to those who need it most.

“This is not a war we started, nor is it a war we participated in… But it is a war that will affect our country.

“The challenges may be significant, but I promise to do what is right and fair, sensitive to the changing world and responsible to the national interest.”

The announcement was dismissed as “incredibly weak” by Green Party leader Zack Polanski, who accused Ms Reeves of “failing to understand the extent of the cost of living crisis that is about to hit this country”.

Meanwhile, Conservative Party leader Kemi Badenoch said removing taxes on energy bills would be “much better” than offering targeted support to guard against an expected rise in costs.

While fuel duty is thought to rise in September, the Conservative Party leader said: “Increasing fuel duty at this time is pure madness and let’s extract our own oil and gas in the North Sea.”

He also criticized the government for failing to prepare for the Middle East crisis.

“Keir Starmer was caught with his trousers down, unprepared, not knowing what was going to happen, with no answer other than sticking his head in the sand,” he said.

But the Confederation of British Industry (CBI) was among those who said the government was right to consider a targeted approach.

“This is not the time for ad-hoc, unsustainable solutions that could damage the UK’s public finances,” CBI director general Rain Newton-Smith said.

But he added that businesses were already facing “very high energy costs” before the war and argued that the government “can now do more, including reducing policy costs from companies’ bills and targeted support for energy efficiency”.

The average pump price for a liter of unleaded petrol in the UK was 144.2p on Monday; This was up 3.9p on the week and a rise of 12.0p since 2 March, shortly after the crisis began. This is the highest price for unleaded gasoline since July 2024.

Meanwhile, Department of Energy Security and Net Zero figures showed that the average liter price of diesel stood at 166.9 points on Monday, up 8.1 points on the week and 24.7 points since March 2. This figure was the highest diesel price since March 2023.

Motorists in the UK are paying £307 million more for fuel than they would have if prices remained at the level they were before the US-Israeli attack on Iran on February 28, the RAC Foundation said.

Responding to the Chancellor’s statement, Mr Polanski said: “This is an incredibly weak response from the Chancellor to the massive bill increases facing UK households.

“Are we monitoring the situation? Are new forces being considered? Reeves’ tepid remarks show that he and his government do not understand the extent of the cost of living crisis that is about to hit this country.”

“We need a guarantee that energy bills will not rise after June, financed by strengthened windfall taxes and higher taxes on the extremely wealthy.

“And the government should follow the example set by Spain by taking urgent action to reduce the burden on households by freezing rents.”

Shadow chancellor Sir Mel Stride added: “We enter this crisis from an economically weak position because of Rachel Reeves’s election.

“Taxes are rising, bills are rising, debts are rising, families are getting worse off. Reeves and Miliband talk energy security while blocking British energy, killing jobs and making us dependent on imports.”

“Labour has no plan and hard-working families are paying the price. The Chancellor must abolish the fuel tax, abandon net zero dogma and open up the North Sea.”