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Grant Shapps has indicated the Government would not bring back the energy price guarantee to shield Britons from another surge in gas and electricity prices this winter.
In an interview with The Times, the Energy Secretary appeared to rule out a return to the scheme, which limited the average household’s energy bill to £2,500 a year.
The guarantee, which ended on 30 June 2023, was brought in last October after the war in Ukraine sent gas and electricity prices spiralling for millions of households.
Asked if the Government would reintroduce the guarantee, Mr Shapps said: “We don’t want to be in a position as a government of having to constantly pay energy bills, because the answer — we’re having to tax people in order to pay it back to people — [means] that money doesn’t come from nowhere.
“That doesn’t make sense.”
Currently, a typical household with average energy use pays £2,074 a year under the Ofgem price cap, which will run until September 3.
But the Office for Budgetary Responsibility (OBR) has warned that the UK is failing to develop alternative energy supplies to gas-fired electricity leaving the nation vulnerable to future gas price shocks.
Elsewhere in the interview, Mr Shapps defended the Government’s decision to issue 100 oil and gas licences for the North Sea despite its ambitions to hit net-zero carbon emissions by 2050.
He also indicated the Government could cut taxes before the election if the economy improves and inflation falls.
The Energy Secretary said a reduction in taxes was coming “soon” but warned it would not be “instantaneous and overnight”.
It comes after the Bank of England warned inflation is not expected to fall close to its 2 per cent target until the second quarter of 2025 and Chancellor Jeremy Hunt cautioned the UK was stuck in a “low growth trap.
Mr Shapps pointed to Mr Sunak’s pledge during the Conservative leadership contest to cut income tax from 20p to 16p by 2030, starting with a 1p cut next year.
“As a good Conservative the first thing I know is you need to sort out the macro picture, get growth into the economy, bring down inflation and deal with the longer-term debt,” Shapps said.
“Once you’ve done that you can set your path to lower taxes… we absolutely need to show that we understand the future for people in this country is to be a lower-taxed economy.
“Absolutely it’s in our DNA, in our heart, it’s in the prime minister’s heart as well. He stood for election as leader on the basis of doing that
“It was just that he was honest enough to say it’s not going to be instantaneous and overnight.
“We always want to drive towards that. In good time, but hopefully not too long to wait.”
It has been reported that Mr Sunak wants to cut income tax by 2p in the pound next year in the run-up to the election, with a big giveaway planned for the Tories’ election manifesto.
Mr Shapps was adamant that the Tories could win the next election, but admitted “it’s clearly not a definite” with the party trailing in the polls to Labour.
“Unexpected things happen all the time,” he says. “I think what the country wants is the solid, secure, steady leadership that Rishi provides. It’s not the sort of leadership that shows up instantly in polling. And we still have all this time to an election.”
Mr Shapps also criticised the expansion of the Ulez charge for polluting vehicles by the Mayor of London, Sadiq Khan to cover London’s outer boroughs.
A Conservative, says Mr Shapps, would not have expanded the scheme aimed at cutting air pollution, branding the £12.50 daily penalty “something that looks like a punitive tax on people who often are less well off”.
Both the Conservatives and Labour have been under pressure to rethink environmental pledges following a narrow by-election result in Boris Johnson’s old seat of Uxbridge and South Ruislip.
Labour has admitted that the expansion of the clean air zone was a factor in the party’s defeat in the constituency, where they lost by just 495 votes, with party leader Sir Keir Starmer calling on mayor Sadiq Khan to “reflect” on the loss.
Mr Khan has widened a car scrappage scheme to all Londoners despite a lack of central government funding for the scheme, but has vowed to go ahead with the Ulez expansion.
Since the Tories’ by-election win, Mr Sunak has ordered a review of Low Traffic Neighbourhoods (LTN) and accused Labour of championing “anti-motorist” policies.