Ed Miliband has been warned that businesses face surging energy bills within weeks as the ongoing war in the Middle East leaves companies dangerously exposed to higher prices.
The Energy Secretary held a series of meetings with business groups and energy executives on Thursday.
Members of the so-called “B5” club of business groups told Mr Miliband that a third of companies were expected to renew their energy contracts in April in a move that will pile pressure on the Government to act.
Businesses do not benefit from the same energy price cap that gives households some certainty about energy costs. Typically, companies also lock themselves into energy contracts lasting up to five years.
It raises the risk that bosses already struggling with higher taxes and levies will be forced to accept higher energy prices well into the future.
The warning came amid a renewed surge in energy prices on Thursday. Oil tipped above $100 per barrel again after Iran stepped up its attacks on cargo vessels in the Gulf and the country’s new supreme leader pledged to keep blocking the key Strait of Hormuz shipping route.
Natural gas prices, a key input for UK electricity prices, have also jumped by 60pc since the war in Iran began.
Any cap on energy price for businesses would be costly. While gas prices are nowhere near the levels seen during Russia’s invasion of Ukraine, energy subsidies for businesses cost taxpayers an estimated £18.4bn in 2022.
Several participants described the meeting, also attended by Jonathan Brearley, the chief executive of Ofgem, as a “listening exercise”.
Mr Miliband was also described as “obsessed” with cracking down on price gouging by brokers and hauliers that he believes are profiteering from the turmoil in energy markets.
The B5 is made up of the British Chambers of Commerce, the Confederation of British Industry, Federation of Small Businesses, Institute of Directors and Make UK. Together, they represent the majority of British businesses.
The Federation of Small Businesses previously warned that a typical small firm already faces a 40pc jump in standing charges from April that will take average costs above £5,000. It has called on the Government to follow the relief provided to households and remove net zero levies from their bills.
The Energy Secretary separately met UK power and gas suppliers, who warned Mr Miliband that many households will struggle to cope with the energy price rises predicted in July when the current round of price cap controls ends.
In a round-table meeting to discuss the Gulf conflict, held on Thursday afternoon, they asked him to consider plans for consumer subsidies, price controls and discounted rates for vulnerable households, warning that speed was essential.
Mr Miliband repeated Rachel Reeves’s pledge to “do everything in our power to protect businesses and families in the UK”, potentially including support for energy bills – but offered no detail.
Officials warn that targeting such support on the most vulnerable is key. The energy crisis in 2022 saw ministers offering a blanket subsidy to all households that cost the nation a total of £44bn.
It came as Ms Reeves pledged to name and expose petrol retailers and suppliers who impose “unjustifiable” price rises.
The Chancellor has already written to regulators to instruct them to crack down on profiteering.
She said on Friday: “I will not tolerate any company exploiting the current situation to make excess profits at consumers’ expense. I’m backing drivers and families – and I expect a fair deal at the pump.”
Ms Reeves urged households to use the Government’s new fuel price comparison site, which uses real-time data to get the cheapest deals.
Reeves is ‘rewriting the facts’
The Tories renewed their calls for Ms Reeves to abandon a rise in fuel duty from September.
Richard Holden, the shadow transport secretary, accused Ms Reeves of “rewriting the facts” after suggesting she would not cut fuel duty because it would not benefit motorists.
The Chancellor told a select committee hearing on Wednesday that the money “often just goes to retailers”. But her words directly contradict a report by the Competition and Markets Authority from 2022, which found that generally retailers did pass on fuel duty cuts to consumers fairly quickly.
Mr Holden said: “Rachel Reeves is trying to rewrite the facts. The Competition and Markets Authority was clear that the fuel duty cut was passed on to drivers, with the biggest retailers doing so immediately.
“Rachel Reeves must cancel her planned hike to fuel duty. Global events mean British motorists are already paying more at the pump.”
He added: “For every year of the last Conservative Government, we found the resources to freeze fuel duty. Labour made a different choice, opting for ever higher spending and higher taxes on drivers. Labour must axe their new tax on drivers.”
In a statement following his meetings, Mr Miliband said: “Tackling the cost of living crisis is our number one priority. That’s why we took action at the Budget, and the price cap is coming down in April as a result.
“I know many people will still be concerned by the impact of events in the Middle East. Today I met with executives from across the energy market to discuss these issues.”
“The Government will keep working with the sector closely in the coming weeks and months,” the Energy Secretary added.
