Cut taxes on energy bills before giving bailouts, Badenoch says

The government should cut taxes on energy bills before considering bailouts, Kemi Badenoch has said.

The Conservative leader told the BBC's Sunday with Laura Kuenssberg programme direct payments to households would come with a cost in the form of higher taxes.

However, when pressed she would not rule out direct payments if energy bills spiked.

Last week Chancellor Rachel Reeves said the government would provide support to "those who need it most" if energy bills spiralled because of the US-Israeli war with Iran.

Iran has effectively blocked the Strait of Hormuz - one of the world's busiest oil shipping channels - leading to soaring wholesale oil and gas prices.

Energy bills for millions of people in England, Scotland and Wales are about to fall for three months from April under Ofgem's price cap, which is updated quarterly, but after this they are likely to increase because of the impact of the conflict.

Asked who should get support if energy costs rise, Badenoch told the BBC's Sunday with Laura Kuenssberg programme she wanted to see the government "taking the burden off everybody" by reducing taxes on bills.

She accused the government of prioritising people on benefits and increasing taxes for everyone else.

The Conservatives have already promised to scrap green levies on energy bills, including the Renewable Obligations Certificate and the Carbon Tax, which help fund renewable energy projects.

Pressed over whether she was ruling out direct payments to households, Badenoch said: "I'm not ruling out anything. What I'm saying is let's start off with taking the taxes [off]."

She added: "Let's not pretend that these huge bailouts don't come with a cost."

Badenoch pointed to the spike in interest rates after the Conservative government intervened to support households during the Covid pandemic.

Under Conservative Prime Minister Liz Truss, the government also provided universal support for energy bills following Russia's full-scale invasion of Ukraine.

The current government has signalled the public should not expect everybody to get support this time.

Reeves has said any package would be constrained by the government's borrowing rules and its wish to keep inflation and interest rates as low as possible.

Liberal Democrat leader Sir Ed Davey has suggested the government should provide universal help with energy bills.

The party's energy security spokeswoman Pippa Heylings said the government "cannot simply ignore the millions of families who don't get benefits, but are already facing a cost of living crisis".

The Green Party has said ministers should guarantee bills would not rise in July, when the price cap is updated.

Reform UK has said it would scrap VAT and green levies on household energy bills if the party won power.

Meanwhile, the Conservatives are also calling for the government to maximise domestic oil and gas production in the North Sea and end the windfall tax on oil and gas companies.

Badenoch acknowledged the move would not directly cut energy bills, but said the profits and taxes made from drilling could be used to subsidise them.

The government has banned licences for new oil and gas fields in the North Sea but has said oil and gas would continue to be part of the UK's energy mix in the coming years.

Defending this approach as "pragmatic", Education Secretary Bridget Phillipson told the BBC the UK needed to move away from its dependence on fossil fuels and invest more in home-grown energy.

Reform UK's Zia Yusuf said it was previous Conservative governments that had increased taxes on drilling in the North Sea and introduced green levies on energy bills.

"They are shameless arsonists offering to rebuild your home having spent 14 years burning it to the ground," he told the programme.

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