Chancellor of the Exchequer Jeremy Hunt vowed to scrutinize how businesses pass lower costs through to UK consumers as he announced an “action plan” with regulators to bear down on the cost of living.
Hunt met Wednesday with regulators covering telecommunications, water, energy, banks and supermarkets as Prime Minister Rishi Sunak’s government comes under growing pressure to curb rampant inflation. They agreed to step up efforts to ensure consumers are treated fairly, according to a Treasury statement lacking any major new measures to directly cut prices.
Regulators have agreed to “act urgently in areas where consumers need most support to ensure they are treated fairly,” Hunt said in the statement, adding that the government is “working hard” to halve inflation this year. “Businesses must play their part too and I will keep a watchful eye on the progress they make.”
With inflation proving sticky at more than four times the UK’s 2% target, Sunak and his ministers are trying to deflect some of the blame for the cost-of-living squeeze onto businesses. His government has pointed the finger in recent days at high grocery prices in supermarkets and the failure of banks to pass through in full recent rises in interest rates to consumers.
The cast list for Wednesday’s meeting included the CEOs of Ofwat, Ofgem and Ofcom, which regulate the water, energy and telecommunications industries respectively. The Competition and Markets Authority — which tackles unfair practices in sectors including supermarkets — and the Financial Conduct Authority, which oversees banks, also attended.
The action plan they agreed included:
- The CMA publishing a review of the road fuel market on Monday and bringing forward an update of competition and unit pricing in the grocery sector next month
- Ofcom pushing suppliers to introduce discounted deals for vulnerable customers
- Ofwat cracking down on water companies that don’t do enough to support customers to pay their bills
- The FCA will require banks to explain the pace and extent that they are passing through interest rate rises to savers
- Ofgem will ensure power and gas suppliers are passing falling prices on to consumers, and publish this summer a review into the non-domestic energy market
The regulators also issued an open letter to UK executives, urging them to show restraint on pricing.
“Where the prices of goods and services have risen as a direct consequence of increased input costs, we want to see firms in our respective sectors pass on any relevant reductions as soon as possible,” the letter said. “We will also continue working together to ensure firms in our respective sectors are supporting customers in financial difficulty.”
Earlier this week Hunt said he wanted banks to pass on higher interest rates to savers and Sunak has said he is “100% on it” in tackling the rising cost-of-living.
But the government’s failure to get inflation falling quickly — it has now been at more than four times the target for 14 months — has opened it up to attacks from the opposition Labour Party that ministers aren’t seized of the importance of the squeeze on the cost of living for ordinary Britons.
“His definition of ‘100% on it’ is to gently ask the banks to do the right thing,” Labour Party Leader Keir Starmer told Sunak at the weekly prime minster’s questions session in Parliament on Wednesday. “His softly, softly approach, refusing to put mandatory measures in place, risks leaving a million households without support.”
