Up to 12 million households could face fuel poverty as energy bills continue to rise
Jonathan Brearley, the head of energy regulator Ofgem, told MPs that any such increase could see the number of “fuel poor” households nearly double from 6.5 million to 12 million
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The Government will have “blood on its hands” unless it acts urgently to tackle a surge in energy prices, as watchdogs warned average bills will rise to £2,800 this winter.
The head of energy regulator Ofgem wrote to Chancellor Rishi Sunak today to remind him that the price cap for 23 million households will rise by a further £829 in October.
Jonathan Brearley told MPs that any such increase could see the number of “fuel poor” households nearly double from 6.5 million to 12 million.
“We know that this will have a huge impact on households,” he admitted.
Ofgem also warned that energy debt, already at £1.3billion, would skyrocket, along with the number of customers who are “self-de-registering” because they can’t afford heating or electricity.
Andy McDonald, Labor MP from Middlesborough, slammed Business Secretary Kwasi Kwarteng as he appeared before a parliamentary committee to defend the government’s efforts to help budgets.
He raged: “In constituencies like mine, people will be dying of hypothermia in their own homes this winter and so far I have heard nothing that matches the urgency or scale of the situation we find ourselves in.”
Ofgem’s price cap aims to limit how much households can be billed using standard tariffs and prepaid meters.
In April 2021 the cap rose to an average of £1,138 per year and then rose again to £1,227 last October.
But the big surge came last month, when the average rose 54% – £693 – to £1,971 a year, buoyed by a rise in wholesale costs fueled by Russia’s invasion of Ukraine.
“We expect the October price cap to be in the region of £2,800,” Mr Brearley told the Business, Energy and Industrial Strategy Committee, echoing a recent Bank of England forecast.
The number could be lower if Ukraine’s crisis is resolved quickly, Mr Brearley said, but if not: “It’s entirely possible it could get higher.”
This means average energy bills could increase by almost £1,600 in just 12 months.
Ministers have yet to announce any new aid, despite mounting evidence of the trauma caused by the recent spate of energy price hikes and amid a tsunami of other hikes from the cost of living crisis.
Mr Kwarteng pointed to £9.1 billion of measures Mr Sunak announced in February, including a £150 tax refund for many households, as well as a planned £200 per household in October to be repaid.
Under pressure as to what further action might follow, Mr Kwarteng said: “We’ll have to wait and see what comes.”
Committee chair Darren Jones shot back: “Do you think bill payers will be happy with that answer, just wait and see?”
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The government’s delaying and overturning of a possible windfall tax on energy giants drew fresh criticism.
Simon Francis, coordinator of the End Fuel Poverty Coalition, warned of the “hidden costs of the UK Government’s continued inaction”, including increased pressure on the NHS from people with health problems affected by damp and excessive deaths from winter cold homes .
“If the government doesn’t act now, they will have blood on their hands this winter,” he said
Adam Scorer, executive director of National Energy Action, said Ofgem’s warning would strike terror into the hearts of millions of people who are already unable to heat their homes and get electricity.”
He continued: “It’s going to throw households into a deep, deep crisis.
“The financial, social and health impacts are unimaginable.
“The government simply needs to act and use the welfare system and programs like Warm Homes Discount to provide significant financial support to people ahead of winter.”
He also called on Ofgem to introduce a below-market social tariff as soon as possible.
The TUC said official estimates show energy bills could rise 23 times faster than wages and 38 times faster than welfare payments.
Secretary General Frances O’Grady said: “Millions of families are already breaking up.
“But now they face more bill hikes while ministers do nothing to ensure wages and Universal Credit keep up.
“The Chancellor must now help the families more.
“We need an emergency budget – it’s time to move on with that.”
Gary Smith, general secretary of the GMB union, said: “If Jonathon Brearley is right, this huge hike in the energy price cap will turn a cost-of-living crisis into a catastrophe for low-wage workers.
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“Millions of carers, school staff, NHS workers, retail workers and more are being thrown into fuel poverty.
“Meanwhile, the chancellor and prime minister are doing nothing – paralyzed by their own quarrels.
“Just when we need decisive leadership and action, this administration is sleeping at the wheel.”
Mr Kwarteng used today’s hearing to defend the decision to continue paying £250,000 a year to the co-founder of failed energy giant Bulb.
Hayden Wood is still getting his normal salary despite Bulb needing an estimated £2.2billion taxpayer bailout.
Mr Kwarteng said Mr Wood was being brought on to “smooth the process” of finding a buyer for Bulb.
https://www.mirror.co.uk/money/up-12-million-households-could-27055378 Up to 12 million households could face fuel poverty as energy bills continue to rise