UK 'planning for blackouts in January' as energy crisis heats up Tory leadership race

Officials are considering when they may need to introduce emergency measures to save gas

Fears are growing for how British households will manage a winter of soaring energy bills. Getty Images
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Britain is making contingency plans for a winter energy crisis that could involve controlled power cuts for industry and households, Chancellor Nadhim Zahawi hinted on Wednesday.

Mr Zahawi called in energy bosses for talks as the rival camps competing to form the next government clashed over how Rishi Sunak or Liz Truss would ease the cost of living crisis as prime minister.

An executive at EDF, one of Britain's largest energy companies, called on Ms Truss and Mr Sunak to work together to help support customers with runaway energy bills.

Amid a bleak economic outlook, Bloomberg reported that plans were in place for a scenario involving cold weather and reduced imports from Norway and France in which electricity supplies fall 20 per cent short and have to be rationed.

Far from denying this, Mr Zahawi said on a visit to Northern Ireland that the government was planning "for every outcome" and that "reasonable worst-case scenarios" were being looked at.

But he said: "I don’t think we’ll be in that world, in that space."

The sun rises behind an electricity transmission tower in the U. K. Photographer: Chris Ratcliffe / Bloomberg

Fears over how households will navigate winter were heightened by a forecast that suggested the energy price cap would rocket to £3,582 ($4,326) a year in October and £4,200 ($5,088) in the New Year.

It came after the Bank of England warned last week that Britain was on course for a long recession as energy prices push inflation towards 13 per cent.

Philippe Commaret, managing director of customers at EDF, said current government support was not enough as the price cap on energy bills is set to almost double in October and increase even further at the start of next year.

"The events of the past month have changed the outlook on energy bills dramatically and sadly, the support previously announced will simply not go far enough," he said.

"We are asking government and the two Conservative candidates to work with industry so we can find a viable solution for those customers most in need this winter.

"Customers need to know now that help is coming. Delaying a decision will cause anxiety for millions of people, and discussions need to happen now."

Mr Zahawi was expected to meet energy bosses this week to "knock some heads together" about the crisis, cabinet minister James Cleverly said, amid frustration that companies are making vast profits during the crisis.

But the political response has been muffled by the race to select a new prime minister on September 5, with ministers citing the convention that an outgoing government should not make major policy decisions.

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While European governments seek to conserve gas use and increase storage after Russia's invasion of Ukraine, the UK government has been split into two camps led by Conservative leadership candidates Foreign Secretary Liz Truss and former chancellor Rishi Sunak who have clashed over how to respond.

Charities, business groups and politicians have called on Ms Truss and Mr Sunak to set out how they would help struggling households to cope with the forecast 82 per cent rise in energy prices in October.

Ms Truss is promising an emergency budget to taxes, telling a Tory hustings in Darlington on Tuesday that ministers should "help people have more than their own money" rather than taking with one hand and giving with the other.

The issue has emerged as a key dividing line in the Tory race, with Mr Sunak saying tax cuts would not help pensioners and hinting he would offer more direct support than the grants he previously announced when he was chancellor.

Both candidates played down suggestions from former prime minister Gordon Brown and others that the current government and the rival camps should agree a line on the cost of living crisis so that decisions do not wait until September.

Ms Truss branded the idea a "kangaroo committee" and rejected what she called "Gordon Brown economics", while Mr Sunak said a pact would only work if his opponent changed her mind about focusing on tax cuts.

Liz Truss has put her focus on tax cuts rather than handouts in the Tory leadership race. PA

Conservative MP and Sunak backer Theresa Villiers hinted at a possible further windfall tax by saying that “we do need to look at the huge levels of corporate income which are being experienced at the moment... to see if [oil companies] can play a part in further help of their customers".

“I think we need to take care that we don’t disincentivise vital investment, which is the long-term solution to getting energy costs down and ensuring our energy security. But, yes, of course we need to take seriously whether the power companies could play a bigger part," she said.

A Truss supporter, junior Treasury minister Simon Clarke, said lowering taxes would boost economic growth overall and help avoid a recession.

The opposition Labour Party was quick to point the finger at Tory ministers over the potential power cuts.

"This is the disgraceful result of 12 years of Tory government that has failed to prepare and refused to invest," said shadow climate change minister and former Labour leader Ed Miliband.

He condemned the government for closing a home insulation scheme, dragging its feet over onshore wind and shutting down some of Britain's gas storage facilities.

Ministers plan to expand offshore wind parks and the nuclear sector, but Mr Sunak has promised to cancel even a limited expansion of onshore wind.

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Updated: August 10, 2022, 5:15 PM