𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Household energy bills are set to rise by more than £300 because of Donald Trump’s war against Iran, experts have warned. The Government said it was monitoring the situation “hour by hour” and stands ready to help struggling families, but Chancellor Rachel Reeves suffered a blow last night as official figures showed public debt rising faster than expected.

Borrowing jumped to £14.3 billion in February, £2.2 billion higher than a year ago, despite predictions that it would fall. Experts said the Treasury faced a “double squeeze”, with the conflict in the Gulf likely to cut tax revenue by damaging Britain’s economy, at the same time as placing the Chancellor under pressure to provide cash for struggling businesses and households.

Conservative Shadow Chancellor Mel Stride said the borrowing rise was a result of Labour’s “irresponsible choices”, including allowing the benefits bill to soar. He said: “We’re saddling the next generation with the cost of their failure to live within our means.”

Treasury Minister James Murray, the Chief Secretary to the Treasury, said: “We know there is more to do to. We have to stop spending £1 in every £10 on debt interest, so more money can be spent on policing, schools and the NHS.”

The unexpected rise in borrowing is likely to limit the Chancellor’s room for manoeuvre after a package of support following Russia’s 2022 invasion of Ukraine, including subsidies for energy bills and council tax, cost the Treasury £51 billion.

Energy experts Cornwall Insight issued a prediction that the Ofgem price cap, which limits what suppliers can charge domestic consumers, will rise to £1,973 per year for the average household, up by £332 from April’s figure. They previously predicted a £4 increase, but changed the new figure is a direct result of the war against Iran, including attacks on Iran’s South Pars gasfield, the largest in the world, and Iranian strikes on a gas facility in Qatar.

Craig Lowrey, Principal Consultant at Cornwall Insight, said: “Gas markets were already volatile, and the Israeli strike on Iran’s South Pars field, and Iran’s subsequent retaliation, has increased that instability.”

He added: “The ultimate scale of any increases in bills, whether in July or further ahead, will depend on how long the disruption continues.”

It echoed a warning from the Bank of England earlier this week, which said conflict in the Middle East “has caused a significant increase in global energy and other commodity prices, which will affect households’ fuel and utility prices and have indirect effects via businesses’ costs.”

Ofgem’s price cap is based on average wholesale prices over a three-month period. Gas prices have been climbing in recent weeks, and this is likely to feed through into future electricity prices and the cost of heating homes.

UK natural gas prices reached a three-year high on Thursday after jumping by around 25% during the day, and eased back a little on Friday.

Martin Beck, chief economist at WPI Strategy, said the Chancellor’s efforts to control debt may be doomed to failure if the war continues. He said: “The shock to energy prices creates a double squeeze for the public finances if it persists.

“Higher oil and gas prices would lift North Sea revenues, and stronger inflation could boost receipts from VAT and frozen tax allowances, but those gains would likely be outweighed by the damage to tax revenues from weaker growth and higher public spending on welfare, debt interest costs, and pressure for fiscal support for households and energy-intensive businesses.”

Prime Minister Sir Keir Starmer warned that the longer the conflict continues, “the bigger the impact on the cost of living.” He said: “The best way forward is a negotiated settlement with Iran”.

Action already taken by the Government to support consumers includes a £53 million package for low‑income households who rely on heating oil, after costs soared since the start of the war.

But Local Government Secretary Steve Reed suggested there may be more to come. He said: “The Government is monitoring the situation hour by hour, and we stand ready as things change, to intervene as is appropriate.

“The Government can’t always stop all the storms that may happen around the world, but when those storms come in, we can weather them far better because of a much more stable economy that we’ve got now, because of the choices this Government made.”

Shadow Chancellor, Sir Mel Stride said: “Labour have raised taxes by £66 billion but still can’t control borrowing – with £14.3 billion borrowed in February alone, the highest February monthly borrowing since the pandemic, and debt interest more than double our defence budget, we’re saddling the next generation with the cost of their failure to live within our means.

“Labour have made irresponsible choices: dropping plans to cut spending, hiking taxes on business and wealth creators which has pushed debt to levels not seen since the 1960s.”

Tehran’s throttling of the key Strait of Hormuz shipping route and attacks on energy facilities across the Gulf have heightened concerns about the security of the supply of fossil fuels, and attacks on energy facilities in Iran and Qatar stoked fears about longer-term damage and disruption to gas supplies.

Shell said one of its key gas plants was damaged in the strike on Qatar, which is used to make things like fuel for transport and ingredients for plastics and cosmetics.

Qatar’s state-backed energy company Qatar Energy has halted production of liquified natural gas (LNG) at its site since the beginning of March.