Honourable Members,
The economic effects of the war in Iran are being felt worldwide, including here in the Island. As the Chief Minister has made clear, the Economic and National Strategy Board is meeting regularly to assess developments and Government’s response.
I rise today as Treasury Minister to provide an update on the energy situation from an economic perspective.
Government continues to monitor energy prices and supply closely and to prepare for uncertainty that may last for many months, potentially into next autumn, winter and beyond.
If further intervention is required, responses will be precise, targeted and evidence‑based, aligned with broader economic and anti‑poverty strategies. Effectiveness and fiscal responsibility remain critical, given the long‑term uncertainties we face and the importance of maintaining a sustainable public purse.
However, this Government has already acted to protect households and the wider economy. As Honourable Members will note at the start of the new tax year, the increased personal allowance approved in the February 2026/27 Budget is now in effect. This allows almost all tax‑paying households to keep more of what they earn.
A couple on median salaries will be around £1,000 per year better off, while a typical family with two children and a combined income of around £50,000 will gain approximately £1,100. This change provides meaningful support against inflationary pressures, including those arising from energy costs.
Our existing energy framework is also helping. Gas market regulation and Manx Utilities’ electricity pricing and hedging strategies are working effectively, providing both protection now and reassurance for the future. Notably, the extreme gas price spike of 2022 — with prices exceeding 600 pence per therm — has not been repeated, with current prices broadly in the 100–130 pence per therm range.
Regular liaison with oil companies has been re‑established, building on arrangements put in place during the 2022 energy crisis.
The Council of Ministers’ third Annual Report on Poverty Measures, shortly to be laid before the May 2026 sitting of Tynwald, demonstrates the scale of Government support for those facing hardship. The focus remains firmly on targeted, proportionate and effective support through a coordinated, cross‑government approach.
The report highlights enhanced support for carers and working families, greater access to Exceptional Needs Grants and Budgeting Loans, payment of a targeted winter fuel payment and support for over 8,000 homes through the Energy Efficiency Scheme, prioritising pensioners and low‑income households, alongside pension and benefit increases, with the basic and full Manx state pensions rising by 4.8% from April under the triple lock and inflationary uprating of most other benefits.
Honourable Members,
The response structure announced by the Chief Minister remains in place. The Economic and National Strategy Board meets weekly; industry liaison continues; contingency plans to protect essential services are ready if required; and Government is working closely with charities, whose support for households remains as important now as ever.
Wholesale energy cost increases are already affecting households, particularly through road fuel and heating oil. Heating oil prices have risen by 60–70%, reflecting the Gulf region’s importance to global markets and the lower tax – 5% VAT and no duty – which means wholesale prices pass through more strongly to the final price. On the roads, diesel prices are now around 189 pence per litre and petrol prices are around 154 pence per litre. In 2022 we saw prices of over 190 pence for Diesel and 185 pence for Petrol.
Further knock‑on effects are likely as costs pass through supply chains, particularly in food prices later this year and next due to higher fertiliser costs.
Nonetheless, broad measures such as untargeted subsidies or price caps are problematic. They benefit higher energy users most, often higher‑income households or larger companies, and weaken price signals that encourage efficiency, reduced consumption, and investment in technology to insulate ourselves from global energy shocks.
Energy efficiency and usage must therefore form part of the response. Measures such as a reinstated bus fare cap may warrant consideration, and I look forward to discussions with charities on what further support Government may be able to provide.
Some sectors are more exposed than others, including construction, farming, hospitality and health care. Ongoing industry engagement is therefore essential.
Government is monitoring impacts on public services, though no disruption is anticipated. Treasury engagement continues through regular departmental scrutiny panels.
Honourable Members,
In conclusion, Government will continue to take a coordinated, multi‑departmental approach, working closely with Tynwald, the third sector and community partners to support households, protect the economy and respond proportionately to an uncertain energy landscape.
