Gas shortage: Fears over energy bills as No10 fails to rule out scrapping price cap

Wholesale gas prices have surged by 70% since August, leading to warnings that smaller energy suppliers could go bust. Business Secretary Kwasi Kwarteng later insisted the cap ‘will remain in place’

Downing Street has three times failed to rule out axing the price cap on energy bills amid a growing crisis over gas shortages.

Wholesale prices for gas have surged by 70% since August – and 250% from the start of the year – leading to warnings that small firms could go bust.

Consumers are protected from sudden price hikes by a cap on energy bills, which is due to be reviewed in spring 2022.

Government sources have insisted that the price cap will stay in place, meaning households won’t see a sudden hike in their bills.

But the Prime Minister’s spokesman repeatedly failed to rule out scrapping the cap to prevent firms from going bust.

Asked if the cap would be ditched, he said: “I’ve talked about the energy price cap and what it does and it remains in place to protect customers from a sudden increase in global gas prices and it saves them a lot of money during the winter and autumn months when it is colder.

“[Business Secretary] Kwasi Kwarteng is speaking to the industry now.”

Pressed again, he said: “The price cap remains in place as I say to protect consumers from some increases in global gas prices and it will save them money this winter.”

Asked why he wouldn’t rule it out, he said: “The price cap remains in place and I’m not aware of any change to that at all.”

Following the No10 briefing, Business Secretary Kwasi Kwarteng – who was due to give a Commons statement at 3.30pm – later insisted the cap ‘will remain in place’.

He tweeted: “This morning I led a roundtable with UK energy companies & consumer groups. I reiterated the need for us all to prioritise consumers.

“My task is to ensure that any energy supplier failures cause the least amount of disruption for consumers. Consumers come first. We are looking at options to protect consumers, and meetings continue across government today and this week.

“In any scenario, we will ensure UK consumers have continuity of supply – through a Supplier of Last Resort or a special administrator if needed. The Energy Price Cap protects millions of consumers. It will remain in place.”

Mr Kwarteng is locked in a third day of crisis talks with energy suppliers as concerns grow about the impact of gas shortages on household bills and food supplies

The surge in gas prices has been blamed on factors such as shortages after a cold winter, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.

Consumers will be protected from sudden price hikes by the energy price cap – but suppliers could go to the wall as they can’t pass on the increase to their consumers.

The situation has also triggered a knock-on effect in other industries.

Two fertiliser plants in the UK – which produce carbon dioxide (CO2) as a by-product -have been forced to shut down due to the shortages.

The lack of CO2 could hammer frozen food and meat suppliers who use it in their processes.

Asked about CO2 shortages, No 10 said: “We’ve got a highly resilient food supply chain in the UK, we’ve seen that throughout the pandemic, and we will obviously continue to work with industries that are facing issues to ensure that remains the case.”

The PM’s spokesman added: “As I’ve just said, we have an incredibly resilient supply chain when it comes to food and we’re well prepared to handle any potential disruptions.”

No10 said there were not yet any contingency plans in place to get CO2 back into slaughterhouses.

“We have a highly diverse source of supplies but, as I say, Kwasi Kwarteng has spoken to the company involved over the weekend and will consider any contingency plans as appropriate,” the spokesman said.