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01 Oct 2022

Chancellor told by devolved governments not to pass energy costs to households

Chancellor told by devolved governments not to pass energy costs to households

Devolved governments in Scotland, Wales and Northern Ireland have urged the Chancellor not to pass the cost of an energy cap on to struggling families.

In a joint letter to Chancellor Kwasi Kwarteng, Scotland’s Deputy First Minister John Swinney has joined finance ministers from Wales and Northern Ireland to call for more targeted support for those impacted by the cost-of-living crisis.

It urges the UK Government to impose a windfall tax to ensure the energy sector pays the price, “rather than passing on the cost through higher borrowing”.

It follows the announcement from Prime Minister Liz Truss earlier this month that the price of energy would be capped at around £2,500 – rather than the previous £3,549 increase in October.

While the letter acknowledges the support will “alleviate some of the anticipated additional pressures”, Mr Kwarteng is told that it does not “target support to those who need it most”.

The letter from Mr Swinney, Welsh finance minister Rebecca Evans and Conor Murphy, Northern Ireland’s finance minister, said: “We are deeply concerned at who will bear the brunt of these costs.

“Support should be funded by targeting the windfall gains in the energy sector rather than passing the cost to households through higher borrowing.

“Looking ahead to your forthcoming fiscal statement, we urge you to focus efforts on those most impacted, not just relying on blanket interventions which do not recognise the scale of hardship particular households are facing.

“An extended and targeted support package needs to be provided to help those, who, even with the cap, are facing the impossible choice between heating their homes and feeding themselves and their loved ones.

“Even with the price cap, energy costs are still double what they were last year.”

The letter also emphasises the need for additional support for businesses and the third sector.

It continued: “Ministers in the devolved governments have exhausted the options available to us to address the cost crisis, stretching every pound available to us to provide support.

“The main levers that can make a difference are held by the UK Government and it must now take urgent steps to use these to provide much needed certainty to those suffering hardship and poverty.”

The finance ministers also proposed a quadrilateral meeting to discuss the action required.

A UK Government spokesperson said: “The Government has been clear that it wants to see the oil and gas sector reinvest its profits to support the economy, jobs, and the UK’s energy security.

“We expect our Energy Profits Levy, announced in May, to raise an extra £5 billion in its first year which will help pay for the £400 energy bills discount for all households to help with energy bills from October.

“This is on top of our new Energy Price Guarantee, announced earlier this month which will save the average household at least £1,000 a year based on current energy prices from October.”

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