Fat cat energy firms profiteering from the gas price crisis could face a windfall tax, with ministers ‘looking at all options’ to help households facing rocketing bills.
Millions of families face paying more than £400 extra as the ongoing crisis causes further suppliers to collapse.
Two more energy firms with a combined 800,000 customers, Avro Energy and Green Supplier, went into administration yesterday.
Dozens of other companies are under threat including Bulb, which supplies 1.7million homes.
Customers on cheap tariffs with failed firms face being bumped up to the capped rate of £1,277 – a rise of at least £400.
Energy watchdog Ofgem described the situation as ‘unprecedented’ and confirmed bills would rise further, while Business Secretary Kwasi Kwarteng indicated the Government was considering a windfall tax to help fund the response.
The bleak warning came as food chiefs said supply problems caused by shortages of drivers and farm workers were deepening.
‘Our concern is that the pictures of empty shelves will get ten times worse by Christmas and then we’ll get panic buying,’ said Andrew Woolfenden of Tesco.
Twelve industry groups, led by the National Farmers’ Union, predicted the situation would get worse without a new visa regime to draw in foreign workers.
Customers with failing energy firms will be switched to new suppliers charging much higher tariffs, which is likely to add at least £400 extra to the cost of heat and light.
Meat manufacturers have warned that shoppers are likely to face higher prices as a result of the surge in CO2 costs
Two more energy firms with a combined 800,000 customers, Avro Energy and Green Supplier, went into administration yesterday. Dozens of other companies are under threat including Bulb, which supplies 1.7million homes
Empty shelves ten times worse by Christmas, says Tesco
The sight of empty shelves could get ‘ten times worse’ before Christmas and trigger panic buying, bosses at Tesco have warned.
Britain’s biggest retailer said a chronic shortage of delivery drivers will make it impossible to move goods to stores during the busy festive season.
Gaps have been seen on shelves for months as a result of the delivery crisis, while big chains including McDonald’s and Wetherspoons have apologised to customers for shortages.
Poultry industry bosses have warned of a lack of fresh turkeys and others have suggested problems with deliveries of toys and many other goods.
Now Tesco’s UK distribution chief Andrew Woolfenden has said the situation is set to escalate. ‘Our concern is that the pictures of empty shelves will get ten times worse by Christmas and then we’ll get panic buying,’ he added.
The road haulage industry says there is a shortage of more than 90,000 skilled HGV drivers.
Industry leaders say the only solution is to create an emergency visa to allow thousands of truck drivers from EU countries into Britain to make sure the economy does not grind to a halt.
Boris Johnson, Home Secretary Priti Patel and Transport Secretary Grant Shapps have so far ruled this out, insisting firms need to recruit more drivers and pay them better. Tesco has been offering new driver recruits bonuses of £1,000 since July, while other supermarkets and businesses have taken similar action.
But Mr Woolfenden said firms are fighting over a limited pool of drivers so this approach is ‘moving deckchairs around’.
Tesco has warned ministers it has a shortfall of 800 HGV drivers and asked the Government to temporarily make it easier to bring in workers from abroad.
Andrew Opie, of the British Retail Consortium, which speaks for all the large store chains, said: ‘Retailers are helping train tens of thousands of new British drivers but while this takes place it is vital that Government provides temporary work visas to allow drivers from abroad to fill the gap and keep our supply chains moving.’
A task force has been set up by the Cabinet Office to address supply chain problems.
Industry leaders say the driver shortage is a combined result of Covid-19 and Brexit. The pandemic led to the cancellation of tens of thousands of driving tests for people who would have replaced older drivers leaving the industry.
Meanwhile, the Office for National Statistics said 14,000 European drivers left the UK in the year to June 2020 and only 600 had returned by July this year. The Road Haulage Association puts the number who left at 20,000 and Logistics UK at 25,000.
A Government spokesman said: ‘We recognise business is facing a range of challenges and we are taking steps to support them, including streamlining the process for new HGV drivers and increasing the number of driving tests.’
Twelve food and farming industry organisations, led by the National Farmers’ Union, say a worker shortage of around 500,000 means tonnes of good food is being thrown away.
They sent a letter to the Prime Minister last night warning that without a new Covid Recovery Visa regime for foreign workers ‘more shelves will go empty and consumers will panic buy to try and get through the winter’.
British Steel has warned that soaring energy prices are making it ‘impossible’ to manufacture profitably at busy times of day. The firm said it would normally expect to pay about £50 per megawatt hour but, with prices ‘spiralling out of control’, it has recently been quoted as much as £3,500 at peak periods.
Firms are falling like dominoes as the result of the gas price shock. So far nine have gone bust this year, affecting around 1.9million homes.
Ofgem chief Jonathan Brearley told MPs yesterday: ‘We have already seen hundreds of thousands of customers affected and it could go well above that. This is something we have war-gamed and thought about.
‘The gas price is almost six times the level it was last year and, indeed, it rose by 70 per cent in August. So, we are in unprecedented cost territory.
‘The energy sector has faced shocks… but it really is something we have not seen before at this pace.
‘Unfortunately, when you see costs like this change, ultimately that will feed through to bills. Equally it is true that there are many suppliers under huge pressure now because of that dramatic change in their cost base.’
Adam Scorer, of the charity National Energy Action, said it was imperative to protect consumers and low-income households from the price rise. ‘Damage limitation is the priority for most customers at the moment,’ he added.
Customers with the failing energy firms have typically been paying £800 to £900 a year. But the switch to a new supplier will see them moved to a price cap figure set by Ofgem, which will be £1,277 for an average household from October 1.
And there are warnings that this figure could climb again – by as much as £280 a year – from next April when the cap is next reviewed. Mr Scorer said many of the worst hit by price rises were reliant on Universal Credit.
He described as ‘unconscionable’ the Government’s decision to remove a £20 uplift in the benefit from the start of next month.
Ministers are under pressure to protect the most vulnerable against the spike in the cost of heat and light over the coming months. This could include increasing the number entitled to receive the Warm Homes Discount, which is worth £140 a year.
The surge in wholesale prices is delivering riches to energy companies that own and sell gas and electricity to retail firms, who in turn sell it to homes and businesses.
Business Secretary Kwasi Kwarteng indicated the Government was considering a windfall tax to help fund the response to the crisis.
Labour MP Darren Jones, chairman of the Commons business, energy and industrial strategy committee, said Spain had imposed a levy on ‘the generators and traders who are making very significant profits’ to fund protections for consumers.
Asked if that was a possibility here, Mr Kwarteng said: ‘We are looking at all options. What they are doing in Spain is recognising that it’s an entire system. I am in discussion with Ofgem and other officials, looking at all options.’
The trade body which represents suppliers, Energy UK, said the Government and regulators were warned two years ago that the market was fragile.
Chief executive Emma Pinchbeck said: ‘The point is, right now, we think that good, well-run companies will fail. And that’s a function of both the pricing shock but also market design.’
Her members say the cap on energy prices brought in by Theresa May’s government has played a part in the failure of some firms because they have to sell gas and electricity at a loss. But Mr Kwarteng insisted the cap must stay.
Chief executive of Citizens Advice, Dame Clare Moriarty, said the cut in Universal Credit was ‘coming at the worst possible time’. She added: ‘The Government has shown in this pandemic that it’s willing to support people through hard times. With a cost of living crisis under way, it must reverse the disastrous decision to cut this lifeline.’
At Prime Minister’s Questions, Labour deputy leader Angela Rayner challenged her opposite number, Dominic Raab, to guarantee no one would be pushed into fuel poverty this winter.
She accused the Government of hitting the pockets of working families by ‘cutting the income of a worker on £18,000 a year by over £1,100’ with tax rises.
Miss Rayner added: ‘That is almost exactly the same as an average annual energy bill.’
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