March 24, 2023

Millions of households are bracing for a winter catastrophe of rising energy bills, which experts say will push people into poverty and lead to a rise in avoidable deaths without emergency government support.

The average household’s gas and electricity bills will hit £3,549 a year after the UK’s energy industry regulator confirmed the consumer price cap was raised by 80% from October, issuing a stark warning of the potentially devastating impact.

The increase will completely “erase” the incomes of poorer households, leaving millions at risk of unpayable bills or the choice between heating and eating this winter, charities say.

Analysts at the Joseph Rowntree Foundation highlighted the damage to the entire population, saying single parents would be forced to surrender nearly two-thirds of their income to pay for energy bills.

They say the poorest single adults will see their finances eaten up by “stratospheric” energy bills that account for 120% of their income (net of housing costs), pushing many into poverty.

Consumer advocate Martin Lewis condemned the ministers’ inaction and warned “lives will be lost this winter”.

The latest rise announced by Ofgem has once again highlighted a power vacuum at the heart of the government as ministers await the end of the race to replace Boris Johnson as leader of the Conservative Party.

Price Cap Rising Chart

The Conservatives were confused by Friday’s reaction to the price cap, which means the typical bill will triple from a year ago.

Prime Minister Nadhim Zahawi suggested people should consider reducing energy use, but his possible successor, Kwasi Kwarteng, said he opposed such advice to consumers.

Liz Truss, the front-runner to become prime minister, also declined to elaborate on how she would help families, saying only that she would “make sure people get the support they need”, although Johnson told the broadcaster the next government would be “Obviously” has increased cash “issues”.

The price cap was raised to £1,277 in October last year and is now just under £2,000 after rising this spring. The sharp rise in global wholesale oil and gas prices has been further exacerbated by the Russian invasion of Ukraine.

Peter Matejic, principal analyst at the Joseph Rowntree Foundation, said of October’s gains: “In all my years as an analyst, I haven’t scrutinized an analysis like this article because it’s amazing, It doesn’t feel right.

“It’s impossible to think that paramedics or shop assistants will have to scramble to find hundreds of pounds to pay their heating bills, or that a person’s entire income for a whole year will be less than their energy bills.”

“Crisis Hotspots” Map

Lewis, who criticised Truss for failing to come up with a plan to tackle “catastrophic” energy price hikes, told BBC Radio 4’s Today programme: “If we don’t get further government intervention, beyond what was announced in May, life will be lost on this. Lost in winter.”

The announcement comes as households try to budget for a tough winter, with inflation already exceeding 10 per cent due to soaring food costs in stores and record gasoline prices. The Bank of England predicts the latest rise in energy bills this winter will push inflation to a peak above 13%, while some economists predict it could climb to 18% from January.

The next cap will be introduced in January. Energy consultancy Cornwall Insight on Friday raised its forecast for the announcement to £5,387 from £4,650 previously and raised its estimate for the April cap to £6,616 from £5,341.

Combined with forecasts for January next year, the Resolution Foundation said the bill would be around £2,277 higher than last year’s £3,749 – an extra cost that people can’t afford.

Torsten Bell, chief executive of the think tank, said: “The average winter energy bill is around £500 a month, and customers with prepaid bills need to find more than £700, or more than half of their disposable income, to continue heating.” moon. These costs pose a serious threat to a family’s physical and financial health. “

Prepaid Fee Table Graphics

Ofgem said it would not make a forecast for January’s measures because the market was still “too volatile”, but warned that prices “could get worse by 2023”. The new cap will affect 24 million households—about 85 percent of the population.

This figure includes around 4.5 million prepaid meter customers who will pay an extra £59 a year on average.

Ofgem’s chief executive, Jonathan Brearley, told Channel 4 News on Friday night that the regulator had to make “difficult trade-offs” when setting a new price cap. “[It] Aims to do one thing, and that is to make sure those companies that buy and sell energy don’t charge unfair profits. And, right now, the market is 0% profitable,” he said.

“What it can’t do is, given that we can force companies to get energy from customers for less than it costs to buy the energy they need, it can’t say because otherwise they simply can’t buy energy for those customers.”

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *