UK households face a 65 per cent enhance of their fuel and electrical energy payments this winter to greater than £3,200 a 12 months, in accordance with analysis that highlights the escalating value of residing disaster.
Energy consultancy Cornwall Insight mentioned the vitality value cap for the typical house is now anticipated to achieve £3,244 when it’s revised by regulators in October, up from £1,971 in April. Cornwall predicted the worth cap would rise additional to £3,363 in January.
Morgan Wild, head of coverage at Citizens Advice, mentioned it will be “hugely worrying news for families . . . being pummelled from all sides by rising costs”, including: “The government has stepped in with welcome support on energy bills, but . . . it must make sure money reaches those who need it most.”
The anticipated bounce in costs comes after Russia final month slashed fuel exports to Germany in obvious retaliation for western sanctions following its invasion of Ukraine. Gas costs, which feed into electrical energy prices in addition to residence heating, have nearly doubled previously month.
While the UK obtains solely a comparatively small portion of its fuel straight from Russia, costs are intently linked to these on the European mainland as each markets are linked by pipelines, permitting fuel to circulate the place it’s most wanted. It is extremely reliant on imported fuel, utilizing the gas to generate roughly a 3rd of its electrical energy and to warmth the overwhelming majority of properties.
The authorities has already supplied help to households within the type of a council tax rebate and a £15bn help bundle, which ought to add as much as about £1,200 for the 8mn households on means-tested advantages.
But campaigners have indicated that extra assistance will in all probability be wanted given the dimensions of the rise, as authorities measures have been determined again when ministers thought the typical invoice would rise to roughly £2,800 somewhat than near £3,400.
How a lot assist to supply households with surging vitality payments is prone to be a key pillar of the competition to switch Boris Johnson as chief of the Conservative occasion and prime minister, after he introduced his resignation this week.
Describing the anticipated enhance as “absolutely horrifying”, the End Fuel Poverty Coalition known as on candidates within the contest to “commit to further, short-term, financial support for people in fuel poverty this winter” and to “mitigate any further increases in the price cap” above £2,800.
For single-earner households on the typical UK wage, vitality payments on the degree predicted by Cornwall Insight would take up nearly 15 per cent of take-home pay. In 2019, earlier than the pandemic and Russia’s invasion of Ukraine, the worth cap for the typical family was set beneath £1,200.
Energy regulator Ofgem has confronted extreme criticism after the surge in costs led dozens of smaller vitality retailers to go bust, with most of the prices handed on to bill- and taxpayers.
Jonathan Brearley, Ofgem’s chief government, on Friday mentioned file fuel costs have been “driving the cost of living crisis, causing real harm to customers and the wider economy”.
The regulator is making preliminary proposals to decrease vitality payments in the long run, together with shifting the vitality system away from imported fuel and reforms to wholesale electrical energy markets to cut back the impression of fuel on pricing.
Additional reporting by Gill Plimmer in London
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