Ministers preparing for ‘worst-case scenario’ of persistently high gas costs beyond ‘short spike’
The government is preparing for the “worst-case scenario” of gas costs continuing to stay high beyond a “short spike”, a minister has told Sky News.
Speaking to Kay Burley, Paul Scully said high wholesale gas costs were placing “pressure” on the energy price cap.
Asked what the worst-case scenario was for a rise in the level of the cap, the business minister replied: “This is all part of the conversations that Ofgem will set that cap at, because supply prices are based on a number of factors.
“Clearly, as a government, we need to make sure we are planning for the worst-case scenario because we want to make sure we can protect consumers.”
Pushed on what a worst-case scenario could entail, Mr Scully said: “That it goes on for longer than a short spike. I can’t give you a figure now.”
His comments are in contrast to remarks from Boris Johnson to Sky News earlier this week.
The prime minister told Sky News political editor Beth Rigby that Britain’s energy crisis was a “short-term problem”.
Soaring global gas prices have thrown the industry into crisis, with six firms folding this month: PfP Energy, MoneyPlus Energy, Utility Point, People’s Energy, Green, Avro Energy.
There are fears that more could follow, with Bulb and Igloo reportedly on the brink of collapse.
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Ofgem warns more energy companies will fold
There are now roughly 40 suppliers in the UK market, sharply down from a peak of 70 in 2018.
The chief executive of Ofgem has warned that rising gas prices may not be temporary and more supplies could go out of business in the coming months.
Jonathan Brearley told MPs that “well above” hundreds of thousands of customers could be affected.
The energy price cap is set to rise from next Friday to £1,227, a record level.
Wholesale prices for gas have increased 250% since the start of the year, and there has been a 70% rise since August.
Consumers are protected from sudden price hikes by the price cap, but this puts pressure on suppliers as they cannot pass on the increase in wholesale gas prices to customers.
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The rise has been put down to a number of factors, including a cold winter leaving stocks depleted, high demand for liquefied natural gas from Asia and a drop in supplies from Russia.
The energy crisis is having a knock-on effect in other areas, with rising gas prices affecting carbon dioxide production.
Ministers have struck a deal with American company CF Industries, which produces around 60% of the UK’s CO2 supply, to provide “limited financial support” towards the firm’s running costs for three weeks to help it restart production.
The closure of its two sites last week had prompted fears that shoppers could start noticing shortages in poultry, pork and bakery products within days.
CO2 is injected into the packaging of perishable foods such as meat and salads to inhibit the growth of bacteria, typically prolonging the shelf life of products such as beef steak by around five days.
The gas is also used to stun animals prior to slaughter, and is deployed as a coolant for medicines and vaccines in the NHS, and likewise in nuclear programmes.
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PM ‘not worried’ about energy shortages
Speaking to Sky News, Iceland’s managing director said the UK has to become less reliant on gas by using a “broader energy mix” to prevent shortages.
Richard Walker said: “In the short term I’m more confident that supply chains will be more uninterrupted.
“Certainly in our own business we’ve been building up stocks of key lines that potentially could have been at risk, like frozen meat for example, and we’re confident that we have fully stocked shelves.
“However I think we’ve now got to think longer-term. This loan is only three weeks: what happens after that, or what happens the next time the gas prices spike?
“So we need a broader, more diverse and therefore more sustainable energy mix so we’re not so reliant on gas.
“We also need to look as a food industry, but also further up the supply chains, at different, better ways of capturing CO2 and potentially using alternative gases as well.”
Politics
University tuition fee rise branded ‘morally wrong’ – as Education Secretary Bridget Phillipson defends increase
The education secretary has said no decision has been made on whether university tuition fees will increase with inflation each year.
Bridget Phillipson has announced the maximum cap on tuition fees in England will go up in line with inflation from April 2025.
The cost of tuition will increase by £285 to £9,535 next year – the first rise in eight years.
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There will also be a rise in maximum maintenance loans to increase in line with inflation, giving an increase of £414 a year to help students with living costs.
However, the education secretary did not say if the rise would continue after that.
Speaking to Sky News’ Politics Hub with Sophy Ridge, Ms Phillipson admitted she did not know what would happen with tuition fees after April 2026.
“We’re going to look at this and the maintenance support and the sector overall as part of the reform that we intend to set out in the months to come,” she said.
“So no decision, no decision has been taken on what happens beyond this.”
She said the government will be looking at “what is required… to get our universities on a more sustainable footing… but also to deliver a better deal for students as a part of that”.
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University tuition fees to increase
The minister said she also “intends to look at” uprating the threshold at which students need to start paying tuition fees back in line with inflation.
Jo Grady, general secretary of the University and College Union (UCU), said the tuition fee rise was “economically and morally wrong”.
She said: “Taking more money from debt-ridden students and handing it to overpaid underperforming vice-chancellors is ill conceived and won’t come close to addressing the sector’s core issues.”
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The National Union of Students (NUS) said students were being asked to “foot the bill” to keep the lights and heating on in their universities and to prevent their courses from closing down amid the “crisis”.
Alex Stanley, vice president for higher education of the NUS, said: “This is, and can only ever be, a sticking plaster.
“Universities cannot continue to be funded by an ever-increasing burden of debt on students.”
Universities have been making up for fees being frozen since 2017/18 by taking in international students who pay more.
However, student visa numbers have fallen after the previous government made it more difficult for them to come to the UK recently, so universities can no longer rely on the fees.
The US presidential race could determine the fate of more than half a dozen proposed crypto ETFs.
Dame Priti Patel has made a comeback as Kemi Badenoch has appointed her shadow foreign secretary, Sky News understands.
Ms Badenoch, who became Conservative leader on Saturday, started officially appointing her shadow cabinet on Sunday evening.
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On Monday afternoon, the two biggest jobs were confirmed, with former home secretary Ms Patel being given the shadow foreign secretary role.
Former shadow work and pensions secretary Mel Stride, who ran in the Tory leadership race and is considered more of a moderate than Ms Badenoch, has been made shadow chancellor.
Robert Jenrick, who lost out to Ms Badenoch, is the new shadow justice secretary, sources told Sky News.
Earlier in the day, Laura Trott, who served as chief secretary to the Treasury under Rishi Sunak, was appointed shadow education secretary.
The new Tory leader made her first appointments on Sunday evening ahead of her new top team meeting for the first time on Tuesday.
Mel Stride was work and pensions secretary and stood to be Tory leader
Now the Conservatives are in opposition, the shadow cabinet’s role is to scrutinise the policies and actions of the government and to offer alternative policies.
Nigel Huddleston and Dominic Johnson, junior ministers under Mr Sunak, were appointed joint chairmen of the Conservative Party.
Keep up with all the latest news from the UK and around the world by following Sky News
The role involves overseeing the party’s headquarters, where staff and committee members have their offices.
Essex MP Dame Rebecca Harris was confirmed as chief whip after the interim chief whip Stuart Andrew said she was replacing him.
She will be responsible for ensuring Tory MPs attend and vote in parliament as the party leadership desires.
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Badenoch: ‘We let standards slip’
Former foreign secretary James Cleverly, who came third in the leadership race, said on Friday he would not be joining Ms Badenoch’s top team.
Ex-prime minister Mr Sunak, his former deputy Sir Oliver Dowden, ex-chancellor Jeremy Hunt and former Brexit, health, and environment secretary Steve Barclay have all said they will be joining him on the backbenches.
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