Ministers are considering lifting the energy price cap to stop soaring prices sending gas firms to the wall, a Cabinet minister has revealed.
Asked if the cap would be removed “if gas prices carry on rising”, Mr Sharma replied: ‘Let’s see where we are. I know that the business secretary is going to have these very detailed discussions.”
Surging natural gas prices have pushed seven energy suppliers out of business this year – and it is feared that another four more may go bust very soon.
Prices surged by more than 70 per cent in August alone and households could already see bills jump by as much as £400 in a year, according to some estimates.
A lack of carbon dioxide is expected to worsen existing food shortages, because meat producers use it to slaughter animals and in packaging.
However, it was unclear whether Mr Sharma meant the government is considering removing the energy price cap – or the ‘green’ surcharge on household bills.
Confusingly, the minister also sought to reassure people, telling the BBC’s Andrew Marr Show: “We have the energy price cap, we have the warm homes discount to protect people at this particular time.”
And he sought to calm fears of an energy crisis, by saying: “We are not seeing risk to supply at this time and prices are being protected.”
Pat McFadden, a Labour shadow Treasury minister, accused ministers of failing to anticipate the crisis and of leaving the UK exposed to “an international price spike”.
“In the short term, what the business secretary must do is ensure continuity of supply, that’s a basic duty of government for both domestic consumers and for businesses,” he told Sky News’ Trevor Phillips on Sunday programme.
He added: “In the long-term, what this has shown is the need to get on with the transition to net-zero and the vulnerability of the reliance on fossil fuel markets, especially international ones.”
Ofgem has already increased the price cap from an average of £1,138 per year to £1,277 from next month, for someone on a standard variable tariff.
The next official review is in April, when it may rise above £1,500, according to The Energy Shop price comparison website.
The UK relies on gas-fired power plants to generate almost half its electricity – and low wind speeds have also hit renewable energy generation,
Fertiliser plants in Teesside and Cheshire have shut and Ranjit Singh Boparan, the owner of Bernard Matthews and 2 Sisters Food Group, said the supply of turkeys at Christmas could not be guaranteed.
“The CO2 issue is a massive body blow and puts us at breaking point, it really does – that’s poultry, beef, pork, as well as the wider food industry,” he said on Saturday.