Sir Keir Starmer is to chair an emergency Cobra meeting to address the economic impact of the Iran war, having been warned that price rises are “inescapable”.
Senior cabinet ministers, as well as the governor of the Bank of England Andrew Bailey, are expected to discuss energy security, the resilience of industry and supply chains, as well as how to help families and businesses with bills, as the conflict in the Middle East enters its fourth week.
Over the weekend tensions heightened again as Donald Trump warned Iran he would “obliterate” its power plants if it does not reopen the Strait of Hormuz, which is crucial to the world’s oil supply.
On Sunday night, Sir Keir spoke to Mr Trump on the need for access along the channel, which has effectively been blocked by the fighting.
Iran has hit back at Mr Trump, vowing to target energy and oil infrastructures across the Middle East and shut the strait completely if the US president follows through on his threats.
Ahead of the meeting on Monday, which is also expected to involve the chancellor Rachel Reeves, the foreign secretary Yvette Cooper and the energy secretary Ed Miliband, sources have said the government would “always act responsibly in the national interest”.
It comes after, on Sunday, housing secretary Steve Reed would not rule out possible food and petrol shortages, adding that the government was monitoring the situation “hour by hour” but said there was no need for fuel rationing yet.
Meanwhile, the chief executive of Centrica, which owns British Gas, Chris O'Shea, warned a rise in energy bills may be “inescapable” if the war in the Middle East “stays as it is”.
Asked if the government had a plan for shortages of petrol and food, Mr Reed told Sky News’ Sunday Morning with Trevor Phillips: “Of course, we need to be prepared for any eventuality.”
But, he added: “There’s no need to ration fuel. People should go around and buy their fuel, just like they always would. If the situation were to change, then the government would look at what was required in that circumstance.”
He later said that when it came to energy bills, which look set to spiral due to the soaring cost of oil and gas due to the conflict, “the government will take whatever action is necessary”.
Mr O'Shea told the BBC that the impact on gas, and therefore electricity bills, from the closure of the strait, a key shipping lane, “should be lower than the impact on oil. So, my gut feel is that you'll see more of an impact of this in the petrol pumps than you will in bills”.
He also backed the idea of targeted government support to help people with bills, which he described as “far better than blanket help”, and called for more exploration in the North Sea to cut energy prices.
It came as Sir Keir was urged to impose a temporary profit cap on energy companies and petrol retailers to stop them benefiting too much from the Iran war, by the government’s cost of living tsar.
Lord Walker of Broxton, a boss of the supermarket Iceland, has asked the government to examine limiting profits during crises.
“As executive chairman of a retailer, I have no problem with profit. It’s what allows businesses to invest, employ people and pay tax. But I do have a big problem with profiteering, especially when families are under real pressure,” Lord Walker said in an article for The Sunday Times.
He added: “I have asked the government to consider a temporary profit cap to stop producers and retailers exploiting the crisis to make windfall profits at the expense of consumers.”
Lord Walker, a former Conservative who became a Labour peer last year, said petrol retailers and energy producers had been summoned to Downing Street and warned that “opportunistic rip-offs” would not be acceptable, in what he described as “a shot across the bows”.
He added that the Competition and Markets Authority (CMA), which also took part in the meeting, had “newly enhanced powers to step in if required”.
There has been a surge in global energy prices as a result of the conflict in the Middle East.
The average annual household energy bill alone is predicted to rise by £332 in July, according to the latest forecast from Cornwall Insights, and experts have warned that further rises in the price of petrol and diesel are inevitable after attacks on energy infrastructure in the region.
But Ms Reeves has been urged not to raise taxes in response to the economic shock brought on by the US’s war with Iran.
UK defence ‘not adequate’ to stop ballistic missiles from Iran claim military experts
UK insists Britain is safe as Israel accused of exaggerating Iranian missiles threat
The location of seven new towns to be built across the UK revealed
Warnings about Iran’s missile range exaggerated and UK is safe, says minister
Starmer says US strikes on Iran won’t be launched from Cyprus after row over UK bases
Reeves warned not to raise taxes to protect UK from Iran war economic shock
