Rishi Sunak is under growing pressure to tackle the cost of living crisis after Boris Johnson said he is ‘constantly’ meeting with the Chancellor to discuss rising energy bills.
Mr Sunak is due to hold talks with Tory MPs this evening and in the coming days, according to the BBC, as he tries to dampen Conservative anger on the issue.
Some Tory backbenchers are adamant the Chancellor and the Prime Minister must act now to address soaring energy bills and spiking inflation.
Mr Johnson revealed during a visit to a vaccination centre in Uxbridge this morning that he met with Mr Sunak last night to discuss the energy issue.
The PM said he knows that rising fuel costs are ‘making life very tough’ and he understands ‘how difficult it is’ for people.
The premier said ‘we’re certainly looking at what we can do’ as he hinted action will be taken before April when the energy price cap is due to be reviewed and a National Insurance hike will go ahead.
One of the options being considered by ministers is to offer energy firms billions of pounds in loans so they can spread the current higher-than-normal cost of gas over a longer period.
This would enable them to avoid having to hit consumers with a massive bill increase in April.
Mr Johnson’s comments came after Michael Gove said Government support on energy bills should be targeted at ‘those most in need’.
The Communities Secretary said it is ‘important that we look at a range of options’ for helping struggling families but stressed ‘we should be concentrating our support most on those with the least income’.
A new poll has revealed one third of Britons fear they will be unable to pay their energy bills this year.
A YouGov survey published by The Times found 33 per cent of people expect their fuel bills to become unaffordable in 2022.
Meanwhile, 86 per cent are braced for the cost of living to increase and two thirds (67 per cent) are personally worried about rising prices.
The Prime Minister is expected to hold further talks with Mr Sunak and Business Secretary Kwasi Kwarteng this week.
There are fears inside Whitehall that elevated wholesale energy prices could last for a lengthy period of time and there will be pressure on the Government to keep in place any new help until there is a dip.
The Treasury is therefore taking a cautious approach to agreeing new support as it seeks to avoid an expensive long-term commitment.
Senior Tories have warned Mr Johnson he will be punished at the ballot box unless he remedies the cost of living crisis.
Boris Johnson is under growing pressure after a new poll found one third of Britons fear they will be unable to pay their energy bills this year because of the worsening cost of living crisis
The Prime Minister is expected to hold further talks with Chancellor Rishi Sunak and Business Secretary Kwasi Kwarteng this week as they try to agree measures to help struggling families with their energy bills
The wholesale price of gas spiked at the end of 2021 because of high demand around the world.
Predictions have suggested that bills could increase by more than 50 per cent in April when a review of the energy price cap is conducted.
The cap is currently set at an already record-beating £1,277 but analysts believe it could go up to £1,995.
Mr Johnson said this morning that he met with Mr Sunak on Sunday night to discuss cost of living pressures.
‘I have been meeting the Chancellor constantly, I met the Chancellor last night to talk about it,’ he said.
‘I understand how difficult it is for people, I understand the pressures that people are facing on household finances.
‘This is the result of global price spikes as a result of the economy coming back from Covid.
‘But it’s making life very tough. And we’ve got to make sure that people are aware of all the things that they can do, all the money that we’re putting in via local councils to help people in hardship, the cold weather payments, the warm homes discount, the money for pensioners.
‘Altogether, the package altogether to support people and particularly to support the energy, the cost of heating, is about £4.2 billion.
‘But you know, I understand how difficult it is. And we’re certainly looking at what we can do.’
Mr Johnson also acknowledged that energy bills are ‘just one component’ of the pressures currently facing households.
He said rising inflation has been caused by the ‘world economy coming back from Covid’.
‘We’ve got to help people, particularly people on low incomes, we’ve got to help people with the cost of their fuel, and that’s what we’re doing,’ he added.
Downing Street would not set a timetable for action to be taken on energy bills but the Prime Minister’s Official Spokesman said: ‘We recognise the pressures that are coming and some are coming in the spring.’
The spokesman said there is a ‘wide array of measures already in place to help those most in need’ and the Government is ‘looking at further ways to abate costs on things like energy prices’.
Labour has repeatedly called for VAT on energy bills to be slashed as one way to help households.
Mr Gove was asked on Sky News this morning if he would support such a move and he replied: ‘Well, again I think it is important that we look at a range of options here in order to help.
‘The Government already provides additional support for those who are in particular difficulties.
Senior Tories have warned Mr Johnson he will be punished at the ballot box unless he acts now to tackle the cost of living crisis
Backbenchers have warned the Chancellor the 1.25 per cent national insurance rise coming into force in April would worsen the pressures on family finances
‘We have warm homes payments, there are other ways in which we support people so I think it is important when we are thinking about how we help people that we look at ways in which we can target our support most effectively on those most in need.’
He added: ‘I think we should always seek to cut taxes wherever we can but also it is important when we are providing support for people that we also target it most on those who need it most.’
Asked again if he would support cutting VAT on energy bills, Mr Gove said: ‘In my view, the more we can cut taxes the better.
‘But at this point I think that the prudent and the responsible thing to do is to recognise that we need to take a balanced approach and a balanced approach means that when we can support we provide support most to those in the most difficult circumstances.’
Mr Gove said the Government ‘should be concentrating our support most on those with the least income, the least wherewithal in order to be able to meet those and other bills and that is what we do’.
Mr Johnson has been told by senior Tory figures that he must get a grip of domestic issues and deliver on his 2019 election pledges if he is to win the next election.
Ben Houchen, the Conservative mayor of the Tees Valley, wrote in The Times Red Box that the PM ‘must make it his New Year’s resolution to redouble and refocus the government’s work to level up the United Kingdom’.
He said: ‘It’s time for the Prime Minister to focus, remember what got him elected two years ago, and what the British people need to see him return as prime minister at the next election.’
Three Tory select committee chairman have issued similar warnings as they called on the PM to act.
Julian Knight, chairman of the Commons culture committee, said last night: ‘Boris needs to wake up and listen to his party on energy and set a clear path out of the cost of living crisis. In the short-term, he needs to abolish the VAT on energy bills and get rid of the green taxes.’
Robert Halfon, chairman of the education committee, described the cost of living as the ‘number one issue facing the Prime Minister’.
The former minister said: ‘People voted for Boris because they believed their financial security and prosperity would be better – he has got to make it happen.’
Tobias Ellwood, chairman of the defence committee, said: ‘It’s now becoming a totemic domestic issue on how we are handling the economy and the Government is very conscious of this.
‘I hope the Chancellor will… provide both temporary and long-term solutions to both the cost and security of energy supply.’
Lord Frost, the former Brexit minister, warned in The Mail on Sunday that the PM risks losing the next election unless he returns to the Tory values of ‘free markets, free debate and low taxes’.
One senior Conservative said yesterday: ‘People are p***** off about parties in No 10 now but it will pass. What won’t pass is the anger people will feel when, far from being levelled up, they find their standard of living has been levelled down.’
Labour has unveiled its own proposals for tackling energy price rises, which include scrapping VAT on bills and introducing a windfall tax on North Sea oil producers.
It claims the measures would save the average family £200, rising to £600 for those on low incomes.
Sir Keir Starmer today claimed that Labour is stepping into the ‘vacuum of leadership’ left by Mr Johnson on the cost of living crisis.
The energy price cap is due to be reviewed in April and experts expect it to rise by more than 50 per cent
Mr Johnson has already effectively ruled out a blanket cut to VAT on fuel bills but the Government is examining other options to alleviate pressure on household finances.
The PM told a Downing Street press conference last week that he is not ‘ruling out further measures’ to help on energy bills but cutting VAT is ‘a bit of a blunt instrument’.
The energy industry has asked the Government to provide billions of pounds worth of loans to help it spread the elevated cost of gas over a longer period of time to avoid a massive increase in household bills in April.
Whitehall officials have reportedly been working on a loan scheme but it is thought it would be much smaller in size than the £20billion fund which has been asked for by some firms.
There are also growing calls for ministers to slash green levies on energy bills to give families some respite from rising costs.