UK Chancellor Rachel Reeves is considering a package of support for households struggling with higher heating oil costs following global impacts from the US-Israel war in Iran. In an interview with The Times, Reeves stated she has found the money to help and that the Treasury is looking at different options to assist those most vulnerable to soaring energy bills.
Key Takeaways
UK Chancellor Rachel Reeves is considering targeted support for households struggling with higher heating oil costs due to global impacts from the US-Israel war in Iran. About 1.7 million households rely on kerosene, which has seen significant price increases and supply issues.
- UK government explores 'targeted' support for poorer households facing surging energy costs
- Over a million British households use oil for heating, particularly in rural areas and Northern Ireland
- Heating oil prices have doubled since the start of the conflict, with some orders canceled or unavailable
- Chancellor Rachel Reeves rules out universal help, citing affordability concerns
- Competition authorities are monitoring heating oil suppliers for potential price gouging
About 1.7 million households in England, Wales, and Northern Ireland rely on kerosene for heating and hot water. Unlike gas and electricity prices, which are capped, heating oil prices are subject to volatility and have doubled since the start of the conflict. Some households have faced canceled orders or been unable to secure heating oil at all.
The increase in global oil prices has caused a spike in heating oil costs, commonly used in rural areas not connected to the main gas grid. The support is expected to be announced early next week. A spokesperson for the government said Reeves would take necessary decisions to help families with the cost of living and protect public finances.
Reeves's comments come after ministers met with petrol retailers on Friday as the jump in oil costs has caused prices to rise to an 18-month high. The Petrol Retailers Association (PRA) rejected ministers' suggestions of 'price gouging' but briefly threatened to withdraw from the meeting.
Energy Secretary Ed Miliband expressed concerns over market practices and noted that the competition watchdog had raised concerns in December. Fuel duty, currently frozen, is set to rise in September, which is now under review. Conservative leader Kemi Badenoch has called on Reeves to scrap the increase and urged the UK to 'start drilling' for oil in the North Sea.
Reeves told The Times that the government was looking at options to help those vulnerable to sharp rises in energy prices, especially those who relied on heating oil. She ruled out universal help for all households, stating it would be unaffordable. The Labour government has come under pressure from opponents to cap regulated household energy tariffs and scrap a planned rise in vehicle fuel duty.
The Treasury has already nudged competition authorities to monitor the energy industry closely. Specific help is being planned for people who rely on heating oil to warm their homes. There's also been a public tiff with the industry after ministers started talking about price gouging and profiteering.
Britain’s Competition and Markets Authority (CMA) has contacted several firms involved in the supply of heating oil 'as a matter of urgency' to assess whether their practices raise any concerns. The CMA stated it would not hesitate to take enforcement action if potential breaches are identified. Additionally, the CMA is monitoring vehicle fuel prices to identify if the current situation is being exploited.
Reeves plans to use a speech on Tuesday to address energy issues and call for closer alignment with the EU single market to boost growth. She told The Times, 'Brexit has not been good for our country, for growth, for prices in the shop.' Reeves added that while it is almost 10 years since the UK voted to leave the EU, there is still much that can be done to improve trading relations and align with the EU single market where it serves national interests.
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