Chancellor Rachel Reeves has said the economic challenges from the Iran war may be “significant” and contingency planning is under way for energy bill support “for those who need it most”.
The crisis in the Middle East has pushed up oil and gas prices, hitting motorists as they fill up at the pumps and potentially pushing up domestic energy bills later this year.
Ms Reeves said work was under way on targeted help for households when the current energy price cap expires at the end of June and global prices could push up domestic bills.
She told MPs: “Contingency planning is taking place for every eventuality so that we can keep costs down for everyone and provide support for those who need it most, acting within our iron-clad fiscal rules to keep inflation and interest rates as low as possible.
“This is not a war that we started, nor is it a war that we joined… but it is a war that will have an impact on our country.
“The challenges may be significant but I promise to do what is right and fair, being responsive in a changing world and responsible in the national interest.”
Ms Reeves indicated she was looking at targeted help rather than the blanket approach to energy bill help offered by then-prime minister Liz Truss in the wake of Russia’s attack on Ukraine.
That “gave the support to the most wealthiest of households” and “left us with high levels of national debt, a cheque written then for a bill that is still being paid today”.
The Chancellor will be meeting supermarkets and banks later this week to discuss what help they can offer customers.
The Competition and Markets Authority is being given new powers to clamp down on price gouging through an anti-profiteering framework.
The average pump price of a litre of unleaded petrol in the UK stood at 144.2p on Monday, up 3.9p week on week and a jump of 12.0p since March 2, shortly after the start of the crisis.
This is the highest price for unleaded petrol since July 2024.
The average price of a litre of diesel stood at 166.9p on Monday, up 8.1p week on week and an increase of 24.7p since March 2.
It is the highest price for diesel since March 2023.
Ms Reeves said the Fuel Finder app would allow motorists to avoid “rip off prices” by comparing petrol station prices.
The Chancellor also set out the need for the UK to improve energy security to shield if from global market turmoil, promising legislation to implement the Fingleton Review to speed up the nuclear power planning process by 2027.
And she said the Government was encouraging investment in North Sea oil and gas tiebacks – satellite wells to exploit existing fields.
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