Speaking as Chancellor Rachel Reeves considers ways of easing the pressure on households in next week's budget, energy minister Michael Shanks conceded that Labour's election pledge to cut bills by £300 by converting the UK to clean power has not been delivered.

It comes as Ofgem announced the average annual energy bill will rise by 0.2% in January, despite wholesale costs falling.

Major forecasters Cornwall Insight had predicted a 1% drop - but the energy regulator has moved in the opposite direction. Between January and March, the typical annual dual fuel bill will be £1,758 - up from the current £1,755 cap.

The UK has the second-highest domestic and the highest industrial electricity prices among developed nations, despite renewable sources providing more than 50% of UK electricity last year.

"The truth is, we do have to build that infrastructure in order to remove the volatility of fossil fuels from people's bills," Mr Shanks said.

"We obviously hope that that will happen as quickly as possible, but there's no shortcut to this, and there's not an easy solution to building the clean power system that brings down bills."

His comments come amid growing scepticism about the compatibility of cutting bills as well as carbon emissions, and growing evidence that the government's pursuit of a clean power grid by 2030 is contributing to higher bills.

While wholesale gas prices have fallen from their peak following the Russian invasion of Ukraine in 2022, energy bills remain around 35% higher than before the war, inflated by the rising cost of reducing reliance on fossil fuels.

The price of subsidising offshore wind and building and managing the grid has increased sharply, driven by supply chain inflation and the rising cost of financing major capital projects.

In response, the government has had to increase the maximum price it will pay for offshore wind by more than 10% in the latest renewables auction, and extend price guarantees from 15 years to 20.

The auction concludes early next year, but it's possible it could see the price of new wind power set higher than the current average wholesale cost of electricity, primarily set by gas.

Renewable subsidies and network costs make up more than a third of bills and are set to grow. The cost of new nuclear power generation will be added to bills from January.

The government has also increased so-called social costs funded through bills, including the warm home discount, a £150 payment made to around six million of the least-affluent households.

Gas remains central to the UK's power network, with around 50 active gas-fired power stations underpinning an increasingly renewable grid, and is also crucial to pricing.

Because of the way the energy market works, wholesale gas sets the price for all sources of electricity, the majority of the time.

At Connah's Quay, a gas-fired power station run by the German state-owned energy company Uniper on the Dee estuary in north Wales, four giant turbines, each capable of powering 300,000 homes, are fired up on demand when the grid needs them.

Energy boss: Remove policy costs from bills

Because renewables are intermittent, the UK will need to maintain and pay for a full gas network, even when renewables make up the majority of generation, and we use it a fraction of the time.

"The fundamental problem is we cannot store electricity in very large volumes, and so we have to have these plants ready to generate when customers need it," says Michael Lewis, chief executive of Uniper.

"You're paying for hundreds of hours when they are not used, but they're still there and they're ready to go at a moment's notice."

He agrees that shifting away from gas will ultimately reduce costs, but there are measures the government can take in the short term.

"We have quite a lot of policy costs on our energy bills in the UK, for instance, renewables incentives, a warm home discount and other taxes. If we remove those from energy bills and put them into general taxation, that will have a big dampening effect on energy prices, but fundamentally it is about gas."

The chancellor is understood to be considering a range of options to cut bills in the short term, including shifting some policy costs and green levies from bills into general taxation, as well as cutting VAT.

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Tories and Reform against green energy

Stubbornly high energy bills have already fractured the political consensus on net zero among the major parties.

Under Kemi Badenoch, the Conservatives have reversed a policy introduced by Theresa May. Shadow energy secretary Claire Coutinho, who held the post in the last Conservative government, explained why: "Net zero is now forcing people to make decisions which are making people poorer. And that's not what people signed up to.

"So when it comes to energy bills, we know that they're going up over the next five years to pay for green levies.

"We are losing jobs to other countries, industry is going, and that not only is a bad thing for our country, but it also is a bad thing for climate change."

Reform UK, meanwhile, have made opposition to net zero a central theme.

"No more renewables," says Reform's deputy leader Richard Tice. "They've been a catastrophe... that's the reason why we've got the highest electricity prices in the developed world because of the scandal and the lies told about renewables.

"They haven't made our energy cheaper, they haven't brought down the bills."

Mr Shanks says his opponents are wrong and insists renewables remain the only long-term choice: "The cost of subsidy is increasing because of the global cost of building things, but it's still significantly cheaper than it would be to build gas.

"And look, there's a bigger argument here, that we're all still paying the price of the volatility of fossil fuels. And in the past 50 years, more than half of the economic shocks this country's faced have been the direct result of fossil fuel crises across the world."

The Indian HAL Tejas, a combat plane used in the Indian Air Force, crashed at around 2.10pm local time (10.10am UK time) during a demonstration flight as a crowd of spectators watched.

It was not immediately clear if the pilot ejected from the aircraft, the Associated Press reported.

Black smoke rose over the Al Maktoum International Airport - which was hosting the biennial air show - and sirens sounded after the crash.

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The National Crime Agency has revealed a billion-pound money laundering network is operating in 28 towns and cities across the UK.

Couriers collect "dirty" cash generated from drugs, firearms and immigration gangs, which is then converted into cryptocurrency.

Officials say these illicit transactions have a direct link to "geopolitical events causing suffering around the world".

This network was first exposed because of Operation Destabilise - and to date, 128 arrests have been made, with more than £25m in cash and digital assets seized.

According to the NCA, the enterprise is so prolific that it purchased a bank to facilitate payments that supported Russia's military efforts and helped sidestep sanctions.

Posters have been put up in motorway service stations to target couriers, which warn it is "just a matter of time" before they will be arrested.

The NCA's deputy director for economic crime, Sal Melki, has warned the threat posed by this money laundering network is significant.

He added: "Cash couriers play an intrinsic role in this global scheme. They are in our communities and making the criminal ecosystem function - because if you cannot profit from your crimes, why bother.

"They are paid very little for the risks they take and face years in prison, while those they work for enjoy huge profits."

Mr Melki went on to warn that "easy money leads to hard time" - and earning just a few hundred pounds through laundering could lead to years behind bars.

The NCA says Operation Destabilise has already had an impact in criminal circles, with some members of the network now reluctant to operate in London.

Those involved in the money laundering effort have also started to charge higher fees - reflecting the difficulty of cleaning ill-gotten gains.

Cryptocurrencies are often regarded as a haven for criminals because they are perceived to be anonymous, but it is possible to trace these transactions.

Chainalysis is a company that monitors suspicious activity on blockchains, a type of database that keeps records of who sends and receives digital assets - as well as how much.

Its vice president of communications Madeleine Kennedy told Sky News: "Public blockchains are transparent by design, which makes cryptocurrencies a poor vehicle for money laundering.

"With the right tools, law enforcement can trace illicit funds - whether they're connected to drug trafficking, sanctions evasion, or cybercrime - and use those insights to disrupt networks and recover assets."

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Last December, a global investigation led by the NCA smashed two networks whose money laundering activities were prevalent in 30 countries.

Bundles of cash were seized during raids, with detectives describing Smart and TGR as the invisible link between "Russian elites, crypto-rich cybercriminals and drug gangs in the UK".

One of the network's ringleaders, a Russian national called Ekatarina Zhdanova, is currently in custody in France and awaiting trial for separate financial offences.

Security minister Dan Jarvis added: "This complex operation has exposed the corrupt tactics Russia used to avoid sanctions and fund its illegal war in Ukraine.

"We are working tirelessly to detect, disrupt and prosecute anyone engaging in activity for a hostile foreign state. It will never be tolerated on our streets."

The prime minister also labelled the Reform UK leader "spineless" for not taking action against one of his MPs for "obvious racism".

Mr Farage has repeatedly denied the claims against him, with a party spokesperson labelling them "clearly without foundation".

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A Reform UK source said the prime minister was "desperate, sinking in the polls and lashing out".

The Guardian newspaper reported on Tuesday accounts from contemporaries of Mr Farage when he was at independent school Dulwich College, alleging that he made racist and antisemitic comments.

Speaking on the plane to the G20 summit in South Africa, the prime minister said the Reform UK leader needs to "explain the comments, or alleged comments that were made, and he needs to do that as soon as possible".

Sir Keir was also asked about Reform's Sarah Pochin MP saying last month that it "drives me mad when I see adverts full of black people, full of Asian people", which do not "reflect our society" - comments she later apologised for.

But while Mr Farage told reporters he was "unhappy" about the "ugly" remarks, he said they were not "racist".

The prime minister labelled them "clearly racist", however, and hit out directly at the Reform UK leader.

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He told reporters: "The man is spineless. If that had been someone in my party, I'd have dealt with it straight away.

"He needs to explain the latest allegations, and whilst he's at it, he needs to explain why he's too spineless to take action in relation to what is obvious racism in the comments of his fellow MP."

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Sir Keir added that Mr Farage has failed to show "some leadership when it comes to racism".

In a statement in response to the prime minister's comments, Mr Farage said: "For the weakest prime minister in living memory to call me spineless is utterly ludicrous.

"The voters will have their say on both of us at the ballot box next May."

Met Office forecasters had predicted temperatures could fall to lows of -12C (10F) in parts of Scotland early on Friday, with -7C (19F) possible across England and Wales.

Check the latest weather forecast where you are

Frosty conditions are expected this morning, but this should be followed by widespread sunshine as the current cold snap reaches its climax.

"The main reason for that is we've got a little ridge of high pressure moving across the UK overnight - and basically the main difference between that and previous nights is the winds are a lot lighter," meteorologist Simon Partridge explained.

Mr Partridge added: "Friday is really the end of the really cold weather as things turn back to average by the time we get into the weekend."

Hundreds of schools were forced to close yesterday because of the wintry weather - with challenging conditions on the roads and some schools left without power.

Yellow weather warnings for ice covering large swathes of England, Wales and Scotland are expected to expire by lunchtime.

Forecasters say showers could fall as rain, sleet or small hail at low levels - and up to 3cm of snow is possible on higher ground.

Commuters are being advised to allow at least an extra five minutes for their journey because icy patches could form on the roads.

Meanwhile, pedestrians are being urged to stick to pavements along main roads - with cyclists told to use main roads themselves - because they may be less slippery.

Some NHS trusts are also encouraging the public to walk like a penguin because it can reduce the risk of nasty trips on icy surfaces.

Laura Halcrow from NHS Greater Glasgow and Clyde said: "It might look funny, but waddling really works. A slip on ice can cause painful injuries and even hospital stays, especially for older people."

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Gritters have been out in force to treat roads in the hardest-hit areas, especially in North Yorkshire.

Until now, Wednesday into Thursday had been the coldest night of the year so far - with a biting -6.6C (20F) recorded in Oxfordshire.

Amber health alerts covering the North East and North West of England, with a yellow alert across the rest of the country, will expire at 8am tomorrow.

While it will be turning milder as the weekend approaches, this will be accompanied by wet and windy conditions, as well as potentially heavy rain tomorrow.

"The British weather, fickle as always, looks like delivering a brief change to this milder westerly flow followed by an equally quick change back to a chilly northerly flow," Sky's weather presenter Jo Wheeler said.