Britain: New discount on electricity, the opposition bids

From October, consumers are expected to see an increase in their energy bills of up to 78%! The government is called upon to take relief measures and immediately. According to information, Finance Minister Nadhim Zahawi is moving in this direction, who is considering the possibility of reducing the ceiling on energy bills by 400 pounds.

What is the ceiling?

The cap on energy bills is set by the British Energy Regulatory Authority (Ofgem), with the aim of protecting the consumer from extreme increases. Previously the cap was reviewed every six months, but Ofgem decided this year to make the review every three months to more effectively reflect fluctuating wholesale prices.

This is obviously making it difficult for consumers as, from October onwards, the existing cap of £1,971 a year is forecast to rise to £3,500 due to the energy crisis. As if that wasn’t enough, consumers in recent months have seen huge profits made by energy giants and power producers, but that doesn’t stop the mad “race” of rising energy bills. Characteristically, according to forecasts for January 2023, i.e. in Ofgem’s next review, annual energy bills will reach £4,200.

The Zahawi plan and the problems

That is why Zahawi proposes the additional relief measure of 400 pounds. It is recalled that the resigned Ministry of Home Affairs. Rishi Sunak has already supported all households with a direct grant of £400, which will be given from October in 6 installments. The Zahawi plan envisages the creation of a lending mechanism for energy providers. The goal of the £9 billion fund that will be created is to cover the liquidity needs of companies so that consumers are not burdened. The plan is similar to the scheme created by the Ministry of Finance in collaboration with the Central Bank of England to support large businesses during the pandemic.

But there are two big problems. First and foremost, Zahawi is interim finance minister, and the new government to be formed on September 5, either by Sunak or Truss, has already outlined its own ways to ease the cost of living. Secondly, that if the measure is finally implemented, it will take effect from January, which means that consumers will already experience the next steep increase in their energy bills in October.

The opposition, of course, calls for even more drastic interventions. Labor leader Sir Keir Starmer today argued that the cap must remain at £1,971 at all costs. In Sunday’s Mirror he emphasizes that the Labor party has a plan “which meets the demands of the crisis”, while adding that the party would tax “oil and gas producers who are making huge profits”. Labor did not want to give more details, as Keir Starmer himself will do so tomorrow Monday. His proposal is in line with that of Keith Anderson, director of the Scottish energy company “ScottishPower”, who had proposed since April to freeze the ceiling at 1,971 pounds for two years, with the creation of a loan mechanism to the companies that would be repaid over a period of 15 years . The proposal had been rejected by then finance minister Rishi Sunak.

Zoe Katzagiannakis, London

Source: Deutsche Welle