Britain considering loans to energy suppliers as bills soar

The British government’s options to support people facing sky-rocketing energy bills include handing loans to energy suppliers that could cut bills by up to 500 pounds ($587) a year, the Daily Telegraph newspaper reported on Saturday.

Britain’s energy regulator said on Friday energy bills will jump 80% to an average of 3,549 pounds a year from October, spurring calls for urgent government support to households and businesses. Read full story

Finance Minister Nadhim Zahawi has prepared a range of options for government support that the next prime minister, who will take office in early September, can consider, the Telegraph said.

Zahawi told the Telegraph he had been working on a plan to help energy suppliers with loans to provide them greater liquidity in a move that could “put a downward pressure on the price cap by anywhere between (400 and 500 pounds).” The idea, previously rejected, was now “back on the table”, the newspaper reported.

Increases in wholesale prices are passed on to British consumers through a price cap, calculated every three months.

Other options being drawn up by the finance minister include freezing the price cap, increasing state benefits and a grant scheme for small businesses, the Telegraph said.

Zahawi said he was concerned that only targeting support at those who receive state benefits would leave out others including pensioners and middle-income earners who will also likely struggle to pay their bills.

Soaring energy bills, exacerbated by Russia’s invasion of Ukraine, have driven British inflation to 40-year-highs, but Britain’s response has been hampered by the race to replace Prime Minister Boris Johnson that runs until Sept. 5.

Liz Truss, the foreign minister and the frontrunner to replace Johnson, has said she would look at doing more to help businesses with soaring energy costs if she becomes prime minister next month