The energy regulator is set to approve a record rise in household bills on Friday as pressure mounts for an emergency budget to tackle the cost of living crisis.
The industry price cap, which sets the maximum rate suppliers can charge, is expected to rise above £3,500 a year from October for the average dual fuel rate, an increase of more than £1,500 on from April
The announcement by Ofgem, which Labor said would “strike fear” into hearts across the country, will give new urgency to calls for the government to step in to extend the £15bn package to deal with the rise of family costs announced in May.
Wholesale gas prices have risen further since then and hit new records on Thursday, signaling little respite from the relentless rise in energy prices. Experts have predicted average annual bills could top £5,000 from January with rising energy prices pushing inflation beyond 18% next year.
Stark’s data showed Britons have already worried about bills this summer despite low energy use compared to the winter peak. A YouGov survey showed that around 40% of the 1,700 adults surveyed have struggled with food and energy bills in the past three months. Around three-quarters of respondents said the government is doing too little to help those struggling with the recent rise in the cost of living, including two-thirds of Tory voters.
Shadow chancellor Rachel Reeves said: “The only people standing up to measures to help people are the government. We wanted parliament out before the [Ofgem] announcement but that didn’t happen.
“We want an emergency budget. We want the government to say what they are going to do. This announcement will strike fear into the hearts of families everywhere and across the country. Urgent action is needed. Everyone has come up with action plans, except Liz Truss and Rishi Sunak, the two people who can do something about it, who have been silent.”
Despite warnings that two-thirds of households, or around 45 million people, will have been pushed into energy poverty by January, the two hopefuls to replace Boris Johnson as prime minister and leader of the Conservative party have so far refused to put forward any significant thing. new measures to protect the most vulnerable families. Sunak has pledged to scrap VAT on energy bills and a yet-to-be-costed increase in benefit household help, while Liz Truss has pledged help “at all levels” to to companies and households. Both Truss and Sunak have ruled out a freeze on the energy price cap. Labor leader Keir Starmer has set a £29bn freeze on the funded cap, partly due to an £8bn tax hike on energy company profits.
The huge profits oil and gas companies have enjoyed since Russia’s invasion of Ukraine were underlined on Thursday when the biggest North Sea oil and gas producer announced a 12-fold increase in profits. Harbor Energy said half-year earnings had reached $1.5bn (£1.3bn). Harbor said it would deliver an additional $200 million to shareholders as a result of the windfall. The eye-watering profits of major oil and gas producers since the war have prompted accusations of profiteering by Sunak and led May to introduce a windfall tax.
The Unite union said major energy suppliers, distributors and generators had made a combined profit of £15.8 billion last year. United’s general secretary, Sharon Graham, claimed that “rampant corporate profiteering is at the heart of rising energy bills”.
Fuel poverty charity National Energy Action (NEA) estimated that raising the cap above £3,000 would increase the number of UK households in fuel poverty from 6.5 million to 8, 5 million
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Adam Scorer, chief executive of the NEA, said: “The scale of the damage caused by these price rises needs to sink in. A warm home this winter will be a dream for millions as they are priced of a decent and healthy quality life.
“Even with a mild winter, millions of people face a deep freeze. We need to act now to avoid the bleakest winters.”
Graham Duxbury, chief executive of poverty reduction charity Groundwork, said: “What we need are simpler and more stable funding models so we can help the most disadvantaged make better use of the help they receive and preserve. as much heat as they can this winter, but also help those facing energy poverty for the first time to make the practical and behavioral changes needed to minimize their bills.”
Environmental campaigners have said the government should redouble efforts to improve the energy efficiency of homes in light of the energy crisis. Mike Childs, head of policy at Friends of the Earth, said: “A national street-by-street program of home insulation, focused on those most in need, would reduce energy use, reduce climate-changing pollution and could cut energy bills by £1,000 or more every year.”