UK mulls bank loan scheme to help smooth energy bills – BBC

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Flames come out of a household gas ring of a stove in Durham, Britain September 23, 2021. REUTERS/Lee Smith

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LONDON, Jan 15 (Reuters) – The UK government is considering plans to smooth a sharp rise in energy bills expected to hit households in April, the BBC said.

Under a cost deferral mechanism, big banks would loan billions of pounds to energy companies to allow them to spread gas bill increases over five or 10 years, the channel reported.

The UK Treasury could play a role by guaranteeing loans to energy companies.

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Government officials are also considering using the Bank of England, which provided emergency loans to businesses during the coronavirus pandemic, to provide upfront financing, the BBC said late Friday, without citing their sources.

Other options for the government to mitigate the impact of the tariff hike, which could push bills up 50% after a rise in international energy prices, include expanding a rebate scheme for low-income households or cutting taxes on energy.

Prime Minister Boris Johnson is under pressure to act ahead of an expected increase in the fuel price cap that will take Britain’s inflation rate to 6% or higher in April if tax payments for workers and employers are also expected to rise.

Pressure on the cost of living is compounding problems for Johnson, who is being urged to resign by some members of his Conservative Party following revelations by parties in Downing Street that social participation has been restricted.

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writing by William Schomberg; Edited by Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

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