Business secretary Kwasi Kwarteng's 'emergency' meeting with energy bosses yields no resolution

An "emergency” meeting between the government and energy bosses to address rapidly rising wholesale gas prices has failed to produce a resolution, despite the industry's warning that annual household bills could reach £2,000 a year in 2022.

ITV News understands energy secretary Kwasi Kwarteng met with representatives from the sector to discuss building a more resilient retail energy market and protecting customers.

More than 26 energy suppliers have gone bust while wholesale prices climb steeply since September and there are fears that electricity bills for households could rise to unsustainable levels in the new year.

Since September, prices have risen from 54p per therm of gas to £4.50.

Energy UK, the body that represents energy firms, said they have been asking the government for a suite of measures, including a VAT holiday and fuel grants.

It added that alongside companies, customers are being heavily impacted by high costs.

"We're seeing estimates of the price gar being set to £2,000 this spring which is an awful lot of money, which is the average household bill," deputy director Dhara Vyas said.

A government spokeswoman said that during Monday's talks, Mr Kwarteng and the industry bosses agreed on the need to ensure customers have protection.

She said: “Throughout the meeting there was discussion of the issues facing the sector and an agreement for meetings to continue over the coming days and weeks to ensure UK consumers are protected.”

Shadow chancellor Rachel Reeves has called for the government to help consumers. Labour said new official figures showed that rising energy, food and other bills meant the Treasury is expected to have an extra £3.1 billion in VAT receipts in 2021/22.

The opposition party is proposing that the government uses those higher-than-expected receipts to remove VAT on domestic gas and electricity bills completely through the winter months to help ease the burden on household bills.

In response to Labour's suggestion, a government spokesperson said: “VAT receipts this year are forecast to be below the pre-Covid level, with the OBR (Office for Budget Responsibility) forecasting nearly £2 billion less will be received this year compared with directly before the pandemic.”

“We are supporting vulnerable households with the cost of energy through initiatives such as the warm home discount – which is being increased to £150 and extended to cover an extra 750,000 households – winter fuel payments, and cold weather payments.”

Earlier on Monday, Ovo chief executive Stephen Fitzpatrick called for the government to show more urgency. He told the BBC the impact of soaring gas prices will be “an enormous crisis for 2022”.

Mr Fitzpatrick said: “The cost to the consumer has already been more than £4bn. We haven’t seen any action from the government or from the regulator. There’s an acceptance that there’s a problem, but nowhere near enough urgency to find a solution.”

Since 2019, energy suppliers in the UK have been subject to a price cap put in place by the energy regulator Ofgem, limiting the amount they can charge customers.

With the rising prices, many suppliers say they were paying more for gas than they could charge.

The cap is moved twice a year based on the price of energy and is due to next be changed in April.

The regulator is already consulting on a series of proposals which could mean the biggest overhaul of the price cap since it was launched.

The suggestions could include forcing customers to stick with their energy supplier for six months if they are on a price-cap tariff.

This could add extra burdens to households, who might already be looking at a more than 50% increase in their bills from April.

Investment bank Investec believes that the price cap might be hiked from its current level of £1,277 – already a record – to £1,995.

It could be what is needed to keep the UK’s remaining energy suppliers in business.

A government spokesperson said: "We regularly engage with the energy industry and will continue to ensure that consumers are protected through the energy price cap, which is insulating millions from record global gas prices.

“We also continue to support those most in need through our £500m Household Support Fund, the Warm Home Discount and Winter Fuel Payments.”