Rachel Reeves is to signal that middle-income families will not get government help with soaring energy bills today.
The Chancellor is expected to make clear that any bailout will be targeted rather than universal as she responds to the Middle East crisis.
In a Commons statement this lunchtime, she will also outline plans to prevent price ‘gouging’.
Brits are facing an agonising squeeze on living standards despite Donald Trump declaring he is looking for a way to end the US-Israeli war on Iran.
Keir Starmer yesterday braced the UK for the turmoil to continue for ‘some time’ – suggesting the closure of the crucial Strait of Hormuz and damage to infrastructure could still be resonating by Christmas.
He also highlighted the strain on the public finances, with fears the ‘Trumpflation’ shock will drive up spending and borrowing costs.
Domestic energy bills are capped until July, but experts say they could rise by a fifth or more then – putting Ms Reeves under pressure to come up with a support package.
Fuel duty is due to rise in September, even though drivers are currently being hit with eye-watering pump prices.
Food bills are also being closely watched with fertiliser costs spiking because much of the world’s supply comes from the Middle East.
Despite Ms Reeves having pushed the tax burden towards a record high since entering No11, figures last week revealed the public sector racked up the highest February borrowing on record outside of Covid – far more than analysts had expected.
The Chancellor has acknowledged she needs to be ‘disciplined’ on spending, with suggestions that poorer households on benefits will be prioritised.
Touring broadcast studios this morning, energy minister Michael Shanks said of the prospective support: ‘We’re obviously looking at a range of options.’
Pressed if help would be targeted rather than universal, Mr Shanks noted the scale of the bailout the Tories put in place in 2022.
‘Clearly the last action that was taken by the government cost £40billion,’ he told BBC Radio 4’s Today programme.
Ms Reeves will make a statement to MPs following an emergency Cobra meeting yesterday.
Her announcements will include an ‘anti-profiteering framework’ to detect and crack down on companies exploiting the Middle East crisis.
The Competition and Markets Authority is set to be given ‘more teeth’ to root out price gouging.
But Ms Reeves is batting away pleas for Labour to scrap its opposition to new oil and gas exploration in the North Sea. The industry and even renewables groups have pointed out that the UK importing more fossil fuels does not help the global push towards Net Zero.
The Chancellor will argue Britain needs a diverse mix of energy to shield the public from volatile oil and gas markets, vowing to boost nuclear power supplies.
She will say she is exploring government-backed indemnities for critical energy security projects so construction can continue if a project is legally challenged.
Susannah Streeter of Wealth Club said: ‘As another cost-of-living crisis looms, blanket help to bring down energy costs simply doesn’t look viable given the stretched public finances and it’s likely lower-income groups will be first in line.
‘The Government for now appears to be resisting calls for more North Sea drilling and doubling down on its strategy to cut the dependence on fossil fuels.’
