UK Government fails to rule out October energy price hike of nearly £1,000

Downing Street has not ruled out the possibility that energy bills could rise by nearly £1,000 for most customers when the regulator reviews the price cap in the autumn.

It comes after the boss of major energy company ScottishPower called on the UK Government to take urgent action and help the poorest households months before costs are expected to mount again ahead of the winter.

ScottishPower’s Keith Anderson said that energy bills are likely to go up by nearly another £1,000 for millions of households around the UK when the price cap is reviewed in October.

Asked if the Government recognised this figure, and if it was in the “ballpark” of its expectations, the Prime Minister’s official spokesman did not rule it out.

“I can’t comment on speculation – obviously that … wouldn’t be right for me to do so,” he told reporters.

“With Ofgem, I think it’s fair to say that we do expect there to be further increases later in the year, the Chancellor has talked about that and has made clear that we will look to do what we can to help with energy bills in the autumn when we know more about what the prices will (be).”

Official figures published last month showed that almost 200,000 households in Wales – 14% – were living in fuel poverty in October 2021 and a further 153,000 households were at risk of fuel poverty since OFGEM raised the domestic energy cap by 54% in April.

Support

Mr Anderson said: “Given what’s going to happen in October, we think that urgent action is required to put in place a mechanism to support customers through this period.

“You require a sum of about £1,000 to start bringing bills back closer not to where they used to be, but closer to where it’s realistic to expect people to be able to pay them.”

He called for “targeted” support for the most vulnerable customers.

“This could be for customers with pre-payment meters, those on Universal Credit, or those eligible for the warm home discount.

He said the UK Government’s plan to give each household £200 towards their energy bill, a sum that will need to be paid back, will be insufficient.

“Our view is clearly now this £200 is not going to be anywhere near enough,” he said.

“This will take time to implement, and it will take time to agree on the exact format of it … that all needs to be debated, signed, sealed, delivered, designed and agreed by July to allow it to be implemented by October.”

He said there are several different ways for the £1,000 to be funded.

“It could for instance be added to all household energy bills over the next decade.

Bills for the average household whose tariff is tied to the energy price cap rose to £1,971 on April 1 after the price of gas soared over previous months.

It forced the Government to promise the £200 rebate on energy bills from October and also knock £150 off council tax for many households.

But many campaigners have warned that this will not be enough, especially next winter if the price cap goes up again, which is widely expected.

ScottishPower believes this might go to £2,900 on October 1.

Mr Anderson said that it will still be some time before predictions are truly accurate.

However “we see no evidence in the form of prices to suggest right now that’s going to change”, he added.

A Government spokesman said: “We recognise the pressures people are facing with the cost of living, which is why we have set out a £22 billion package of support, including rebates and energy bill reductions.

“We also urge energy companies to support their customers as we manage the impact of high global gas prices.

“We are also supporting vulnerable households through initiatives such as the £500m Household Support Fund and the Warm Home Discount, with the Energy Price Cap continuing to insulate millions of families from high global gas prices.”

Worrying

Following the price hike in April, Wales’ Minister for Social Justice, Jane Hutt said that the figures for people falling into fuel property in Wales were ‘stark and worrying’ and showed the depth of the energy crisis with tens of thousands more people living in energy insecurity and fuel poverty and throwing ‘inequalities starkly into focus.’

Ms Hutt claimed that the action offered by Westminster – the £200 rebate on electricity bills, which must be repaid by every bill payer over five years – is too little and called for the UK Government to take concerted and targeted action to ease the cost-of-living crisis by:

• Paying the £200 electricity bill rebate as a non-repayable grant to all bill payers.
• Introducing a lower energy price cap for lower income households so they are better able to meet the costs of their energy.
• Increasing the rebate paid through the warm homes discount and winter fuel schemes.
• Removing all the social and environmental policy costs from household energy bills and instead meeting them from general taxation, at least part-funded by a windfall tax on the excess profits being made by gas and oil producers.
• Reinstating the £20-a-week uplift to Universal Credit.

The ‘soaring’ increases in energy prices at the beginning of April have coincided with increased standing charges on domestic energy bills, and figures show that people in Wales are among the hardest hit in the UK.

The highest increases are being seen in North Wales where the standing charge is going up by up to 102%, with the additional costs disproportionately hitting those on a lower income and those with pre-payment meters.

Plaid Cymru’s Westminster leader, Liz Saville Roberts MP called for Westminster to pass energy powers over to Wales as they’re “taking too long” to deliver solutions to the climate change crisis and “crippling energy bills”.