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UK ministers will on Monday set out a £50mn package for households hit by the Iran war energy shock, as energy secretary Ed Miliband vowed to prevent a wider sharp rise in gas and electricity bills this summer.
The £50mn intervention, confirmed by government officials, will target about 1mn households mainly in rural areas of Northern Ireland who rely on heating oil, a niche sector where bills have already soared.
Miliband on Sunday said Britain was “intensively working” with allies on reopening the Strait of Hormuz, whose closure has disrupted global oil supplies, and committed to take action to prevent household gas bills surging when regulator Ofgem updates its three-monthly price cap in July.
“As to any further help that may be provided . . . it depends on how long the conflict goes on, but people should be in no doubt this government’s number one priority is to tackle the cost of living crisis and we will do whatever is necessary to do that,” he told Sky News.
Governments around the world are grappling with their response to the economic effects of the US-Israeli strikes on Iran, which have curbed fossil fuel output in the Gulf and fuelled concerns over higher inflation.
Miliband believes the Middle East conflict has justified his policy of pursuing the rapid outlay of renewables and nuclear energy, improving energy security as well as cutting carbon emissions.
“If there is one lesson we must learn from this crisis, we cannot keep being on this fossil fuel rollercoaster,” he said.
Miliband said on Sunday that plug-in solar panels, which usually cost several hundred pounds, would be approved for use in British homes as part of efforts to accelerate homegrown power.
A safety review has concluded that these plug-in panels, which are small enough to be placed on a balcony or in a garden, are compatible with UK plug and electrical standards, meaning sales could begin within months.
The policy echoes a German scheme under which 1mn such panels have been installed in just three years.
Miliband also announced that the next auction of subsidies for renewable energy would be brought forward to July and hinted that the government could scrap a planned 6p rise in fuel duty in September if the Iran war continued.
“We are going to stand by people in this crisis,” he said.
But the government is facing the much more immediate problem of helping consumers deal with rising prices, given that most energy used in the UK still comes from fossil fuels, in particular transport and household heating.
In 2022, after Russia’s full-scale invasion of Ukraine, then Conservative prime minister Liz Truss brought in a support scheme to subsidise energy bills for all households, which ended up costing about £50bn.
Chancellor Rachel Reeves has said any equivalent measures this year would be much more “targeted”, and Miliband on Sunday said the scale of any support scheme would depend on the trajectory of gas prices, which would in turn depend on the duration and scale of the war.
Freeing up greater production of North Sea oil and gas would not change the price of fossil fuels, which is set on international markets, he said, adding: “We are a price taker, not a price maker.”
The government also said on Sunday that changes to the planning system designed to speed up nuclear power stations would apply to renewable energy and other infrastructure projects.
The changes, following on from the Fingleton review, will enable developers to avoid laborious environmental impact assessments and make them eligible for compensation in cases where projects face judicial reviews. But they will also weaken protections for national parks and local species.
Claire Coutinho, Tory shadow energy secretary, said Donald Trump’s request for the UK to send warships to reopen the Strait of Hormuz “should certainly be explored” and called on the government to rule out the planned fuel duty rise.
“Even if the oil prices come down, we don’t think that should go ahead,” Coutinho told the BBC.
