Boris Johnson has admitted he must do more to protect families from a £600 energy bill hike but is scrambling for a solution just weeks before the crisis is set to strike.
The prime minister revealed he has taken personal control of the controversy, as he was accused of a “vacuum of leadership” by Labour, which has put forward a plan to hold down costs.
Ministers have focused on boosting the £140-a-year warm homes discount for the poorest households when the energy price cap soars in April, but Mr Johnson has now appeared to acknowledge that will not be enough.
“We’ve got to help people, particularly people on low incomes. We’ve got to help people with the cost of their fuel and that’s what we going to do,” he said.
But a government source admitted ministers are not close to deciding on a rescue package to hold down bills, calling progress “exceptionally slow-burning”.
“At this stage, I can’t say where we will land,” the source said on the options that have been discussed in talks between ministers and the energy industry for several weeks now.
Mr Johnson has ruled out removing VAT from all bills while a cabinet minister also ridiculed Labour’s plan for a windfall tax on bumper oil and gas profits – even though former Conservative chancellor Norman Lamont suggested it could work.
Anxious Tory backbenchers are questioning why the government is dragging its heels with the new, higher price cap – tipped to soar from £1,277 a year to at least £1,865 – to be announced on 7 February.
Keir Starmer attacked the delay, setting out how would save most households at least £200 and slash the bills of low and middle-earners and pensioners by up to £600.
“Energy bills are going through the roof. That particularly impacts the elderly and the vulnerable and the government is doing absolutely nothing about it. They are asleep at the wheel,” the Labour leader said.
Bills are set to rise in April because of unprecedented wholesale energy costs, combined with rising inflation, stagnant wages and tax hikes to create a cost-of-living crisis weeks before crucial local elections.
The number of UK households living in fuel poverty is on course to hit 6 million this spring, up from the current 4 million. It would be the highest level since records began in 1996.
Mr Johnson, distracted by the Omicron crisis, finally met Rishi Sunak on Sunday evening to discuss a way out of the crisis.
On a visit to a vaccine centre, he admitted rising prices are “making life very tough”, adding: “I understand how difficult it is for people; I understand the pressures that people are facing on household finances.”
When it was put to him that “targeted support” would not be enough when most households are going to be hit by the squeeze, the prime minister agreed the government must “help people with the cost of their fuel”.
Ministers are continuing to hold talks with energy bosses, but are sceptical about an industry plan for a £20bn loan scheme to help defer massive price rises.
They say the energy companies have not been specific about government involvement – or whether the money would be borrowed privately – and that not all firms back the idea anyway.
On Sunday, education secretary Nadhim Zahawi claimed Labour’s plan “doesn’t add up”, saying: “A windfall tax on oil and gas companies that are already struggling in the North Sea is never going to cut it.”
But Labour says 9.3 million working families would save £600 by extending the warm homes discount to all those with children and claiming universal credit – instead of only those with incomes below £16,190, with a child who is under five or disabled.
The party would raise £6.6bn to fund it, from a windfall tax on North Sea oil and gas profits (£1.2bn), oil and gas receipts (£2.3bn) and higher than expected VAT receipts (£3.1bn).
