Rachel Reeves will provide additional support next week for households across the UK facing an increase in the cost of heating oil due to the conflict in the Middle East.
The chancellor is expected to set out plans to help those on low incomes or have other vulnerabilities, particularly in rural areas. Aid will be delivered in England through local councils using the new crisis and resilience fund.
While the amounts involved are yet to be determined, it is understood that ministers could provide additional support to this fund if necessary. In Scotland, Wales and Northern Ireland, devolved governments will receive money to deliver aid.
Heating oil, which provides heating and hot water to around 1.7 million homes in the UK, is not covered by Ofgem’s energy price cap.
In some examples seen by The Guardian this week, customers have seen quoted costs to refill tanks almost triple since fuel supplies were disrupted after the US-Israel war against Iran began.
In Northern Ireland, heating oil is the main source of heating for two thirds of homes.
Reeves said this week he recognized the “unique challenges” faced by people who rely on heating oil and called on Spencer Livermore, financial secretary to the Treasury, to discuss possible solutions with rural and Northern Ireland MPs.
As well as putting pressure on petrol retailers not to take advantage of the Iran crisis to excessively increase prices at service stations, ministers have asked the Competition and Markets Authority to be on the lookout for unjustified increases in the price of heating oil.
People who use fuel generally buy it in bulk to fill their tanks, often because their home is not connected to the gas network.
As wholesale heating oil prices increased, some people had pre-existing orders cancelled, forcing them to reorder at a higher price. Others have had difficulty finding suppliers willing to deliver to them.
While ministers are confident that Keir Starmer’s refusal to support the initial attack on Iran will have broad public support, they are deeply cautious about the impact of rising fuel and petrol prices, particularly if the conflict drags on.
Set to operate from April 1, the crisis and resilience fund provides English councils with money to support communities, particularly under financial pressures. It is funded at £1bn a year for an initial period of three years.
A Treasury source said: “Families who rely on heating oil cannot spread the cost – when the tank is empty, hundreds of pounds have to be found up front. That is why the chancellor is providing targeted help to low-income and vulnerable households across the UK.”
