'Lights will not go out': UK energy supply not at risk and price cap will stay, minister says

ITV News Political Reporter Shehab Khan reports on the rising gas prices and the knock-on effect on consumers

The UK's energy supply is not at risk, the price cap on consumer bills will not be lifted and the government will not bail out failing suppliers, the business secretary has said.

Kwasi Kwarteng described warnings about a gas crisis as "alarmist" and insisted he did "not expect supply emergencies to occur this winter", after trade association Oil & Gas UK (OGUK) said prices had rocketed 250% since January - with a 70% rise since August alone.

The top Tory, updating MPs on crisis talks he held with the industry earlier on Monday, said: "There is absolutely no question of the lights going out."

The rise in gas prices has been blamed on a number of factors, including a cold winter which left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.

But Mr Kwarteng said the UK's domestic gas supply, along with imports from trusted partner Norway, means there is no question of supply being at risk.

Kwasi Kwarteng updated MPs on his crisis talks with energy providers. Credit: Parliament.tv

However, four firms have already folded over the crippling prices and some analysts believe a further 40 could fall by the end of winter, a situation which would pose huge problems in the UK.

The business secretary suggested failing energy companies would be allowed to fold and their previous customers would be transferred to another provider.

"The government will not be bailing out failed companies," Mr Kwarteng said, "there will be no rewards for failure or mismanagement".

  • ITV News Political Editor Robert Peston reports on the prices that will go up next year as a result of the energy crisis

He also insisted the energy price cap, "which saves 15 million households up to £100 a year, is staying".

"Our priority in this situation has to be the consumer, the Great British public, and the cap has done that effectively. It protects and has protected millions of customers from sudden increases in global prices this winter.

"We're committed to that price cap and it'll remain in place."

ITV News Political Editor Robert Peston noted that while Mr Kwarteng said the government would not be bailing out businesses or lifting the price cap, he "revealed nothing material about precisely how he will protect consumers from looming massive energy price rises".

Earlier Prime Minister Boris Johnson promised the government will "do everything we can” to protect energy companies and consumers.

The prime minister told reporters on the tarmac of New York’s JFK airport, after landing there for the UN General Assembly, that people "should be reassured" that short-term energy issues are not only hitting the UK but countries all around the world.

“This is really a function of the world economy waking up after Covid," he said.

“We’ve got to try and fix it as fast as we can, make sure we have the supplies we want, make sure we don’t allow the companies we rely on to go under. We’ll have to do everything we can.

“But this will get better as the market starts to sort itself out, as the world economy gets back on its feet.”

There are 50 energy suppliers in the UK currently, but some analysts think there could be as few as 10 by end of winter.

Business Secretary Kwarteng said "in any scenario, we will ensure UK consumers have continuity of supply - through a Supplier of Last Resort or a special administrator if needed".

It's an approach that Peston says will be "very expensive for the government and taxpayers".

Senior minister James Cleverly speaking to ITV News did not rule out providing struggling companies with government loans to stop them going bust. He said the UK response will be discussed with industry before a decision is made.

Number 10 said there are not plans to lift the price cap, with it designed to "protect consumers from sudden increases in global gas prices and it will save them money this winter".

Pushed on whether the cap could change between October and the next review date in April 2022, he added: "I'm not aware of any proposed change to the price cap."

But, as ITV News Business Editor Joel Hills says, the price cap "wasn’t designed for [a] situation like this" and many small energy suppliers are desperate for it to be lifted.

If the price cap were lifted it would most severely impact the six million people in receipt of Universal Credit, who on October 6 will see their weekly payments reduced by £20 as the government takes away the uplift it temporarily provided to help people weather the pandemic.

The government was being urged by charities to keep the uplift so struggling families can afford rising energy bills, but so far ministers are sticking with the plan to stop the additional cash in two and a half weeks time.

Mr Cleverly, asked whether the government would consider extending the uplift, told ITV News that "the uplift in Universal Credit was always meant to be temporary and it's really important that temporary measures are temporary".

He did not explicitly rule out extending the uplift, but said the "most sustainable way of getting increases into people's pay packet is through their employers increasing their wages".

He said the vast number of job vacancies in the UK economy means employers "are going to have to increase wages" so they can both "retain their current staff and attract new staff".

On Monday morning British Gas agreed to take on an extra 350,000 domestic customers from collapsed energy firm People's Energy.

The company went bust last week, leading to Ofgem finding another supplier to take on the firm's customers.

Outstanding credit balances including money owed to both existing and former domestic customers of People's Energy will also be honoured.

At the same time ministers are grappling with warnings of potential shortages on the shelves as the knock-on effect of the gas price rise ripples through the economy.

Producers have warned that supplies of meat, poultry and fizzy drinks could all be hit due to a shortage of carbon dioxide (CO2).

It follows the shutting down of two large fertiliser plants in Teesside and Cheshire – which produce CO2 as a by-product – with the owners citing the increase in gas prices.

The Food and Drink Federation chief executive Ian Wright said CO2 was essential to many production processes and warned there could be “serious consequences” for supplies within a matter of days.