Starmer announces £53m support to help with heating oil costs

16 minutes ago

ShareSave

Nick EdserBusiness reporter

ShareSave

Getty Images

Prime Minister Sir Keir Starmer has said the government will provide £53m to help “vulnerable” households who have been hit by a sharp increase in the price of heating oil.

Heating oil costs have spiked since the outbreak of the US-Israeli war with Iran, as the price of crude oil has jumped above $100 (£75) a barrel.

Unlike consumers who use gas and electricity for heating and hot water, prices for households using oil are not capped by regulator Ofgem.

As a result, these households have been among the first to feel the impact of rising crude prices and some customers say their costs have doubled.

The issue is particularly acute in Northern Ireland, where about 500,000 homes use it, almost two-thirds of all households.

About 3% of households in England and Wales said oil was their only source of central heating, according to a 2021 census, and 5% of households in Scotland.

The government said its support would be “targeted” to help low-income households in rural communities affected by the recent surge in costs.

In England, the extra cash will be distributed by local authorities via the Crisis and Resilience Fund, which comes into effect on 1 April.

In Scotland, Wales and Northern Ireland the money will be allocated directly to the devolved governments, “with the expectation that it will be used to support vulnerable households”, the government said.

Northern Ireland will receive £17m, England £27m, Scotland £4.6m and Wales £3.8m.

• Live: Follow the latest on the Iran war

Announcing the support, Sir Keir said the UK competition regulator had flagged reports of cancelled orders and prices being pushed up.

“If the companies have broken the law, there will be legal action,” Sir Keir said.

The PM also said the government would continue to work towards “a swift resolution” of the Middle East conflict “because there is no question ending the war is the quickest way to reduce the cost of living”.

I ordered a tank of heating oil. Then the price more than doubled

We will intervene on energy bills if necessary, says Miliband

Last week, the price of crude hit nearly $120 a barrel before slipping back. Oil is currently trading at about $106 a barrel, but that is still much higher than where it was before the conflict began.

Prices have spiked mainly due to the effective closure of the Strait of Hormuz, a vital waterway that carries a fifth of global oil supplies.

For now, household gas and electricity bills in England, Wales and Scotland are protected by the energy cap, which is set by the regulator Ofgem. Under this cap, bills will fall in April.

However, what happens from now until late May on the wholesale energy market will determine what happens to household bills from July. A sustained period of high wholesale costs could mean a sharp increase in energy prices for millions.

The last time there was a particular spike, following Covid and Russia’s invasion of Ukraine, the government had to step in to help with the Energy Price Guarantee.

Miliband told the BBC that “if it’s necessary to intervene, we will” on energy bills. However, he added, any intervention would depend on the scale of the impact from the conflict.

Speaking on the same programme, shadow energy security secretary Claire Coutinho called on the government to implement the “cheap power plan” the Conservatives outlined last year to reduce bills immediately.

Coutinho said the “first port of call should be to reduce costs” to people’s energy bills, “before we go to the taxpayer again”.

Sign up for our Politics Essential newsletter to keep up with the inner workings of Westminster and beyond.

Personal finance

Energy industry

Cost of Living