Business Secretary Kwasi Kwarteng acknowledged that people in the North would bear the brunt of soaring energy prices
Image: Daily Mirror)
Top Tories have admitted that Brits face a “tough winter” ahead, with people in the North to bear the brunt of soaring energy prices.
Business Secretary Kwasi Kwarteng admitted that Brits in northern communities would be hammered by the rising cost of energy due to the colder weather.
And Business Minister Paul Scully said people should be braced for “tough winter”.
Millions of Brits are already facing a cut to Universal Credit payments from October amid growing alarm over a cost of living crisis for families.
Soaring global gas prices have put pressure on energy suppliers, several of which have already gone bust.
Labour accused the Government of complacency after it emerged that the energy regulator Ofgem had warned ministers months ago of the risks.
Shadow business secretary Ed Miliband quoted a letter from Ofgem warning of a “systemic risk to the energy supply as a whole” which had been sent 18 months ago.
But Mr Kwarteng said said that Ofgem’s concerns had been “interrogated” during the pandemic, with the supplier of last resort programme, where consumers are automatically transferred to a new provider if their supplier exits the market, was “found to work”.
It comes after the rise in energy costs sparked fears of a crisis in the food supply chain due to a shortage of carbon dioxide (CO2), which is produced as a by-product in fertiliser plants.
US-owned CF Industries has been handed a Government bailout to restart its UK operations after halting production due to the gas price rise.
Carbon dioxide is used for a range of things in the food sector, including stunning animals before slaughter and keeping fresh products chilled.
In the Commons, Labour MP Rachael Maskell warned that the rise in energy prices will “disproportionately impact people living in the North because it is colder during the winter”.
Mr Kwarteng replied: “I think (she) raises a very fair point and clearly in terms of the gas price the single most important determinant of it is the weather, and she’s absolutely right.
“That’s why we’ve got schemes like the Warm Home Discount and that’s why we’re absolutely focused on protecting the most vulnerable customers, wherever they are in the UK.”
Mr Kwarteng insisted that the Government would keep the energy price cap in place, which protects consumers from sudden hikes in their bills.
However it also puts pressure on suppliers who cannot pass on the increased costs of wholesale gas to customers.
At least 1.5 million Brits have seen their suppliers go to the wall in recent weeks.
Earlier, Mr Scully said Britain should brace for a “tough winter” as gas prices rise and energy firms go bust.
He said: “We know this is going to be a tough winter.
“There are companies that leave the market each and every year, so Ofgem have a tried and tested formula of moving people into a supplier of last resort, because what we want to do is step in and first of all protect that continuity of supply.”
But he shrugged off calls to extend the £20-a-week Universal Credit hike to help the poorest families.
“If you were to reverse the Universal Credit as it is, you would have to put up income tax by the equivalent of a penny and 3p on fuel,” he said.
“You have to find £6billion from somewhere.”
Challenged that “most people would accept putting a penny on income tax” to pay to keep the rise, he hit back: “What you don’t want to be doing, for the lowest paid in particular, is giving with one hand and taking and increasing taxes with the other.”
In a fresh blow to hard-up customers, he also signalled energy bills could rise next spring.
Talks are underway whether the price cap should increase in April, the top Tory said, insisting the Government had to plan for the “worst case scenario” to protect consumers.
The cap, which is reviewed twice a year, is set by the regulator Ofgem and aims to protect millions of customers from sudden hikes in their energy bills.It will rise on October 1 by £139, with the next review due six months later.
The cap is designed to protect consumers but soaring global gas prices have piled pressure on smaller suppliers, with two going bust on Wednesday.
Asked what the worst-case scenario was for a rise in the level of the cap, Mr Scully told Sky News: “This is all part of the conversations that Ofgem will set that cap at, because supply prices are based on a number of factors.
“Clearly, as a government, we need to make sure we are planning for the worst-case scenario because we want to make sure we can protect consumers.”