The suppliers' trade body, Energy UK, has called for immediate government action to assist households facing rising energy bills this winter. The organization highlighted that domestic gas prices increased on Thursday, and forecasts indicate significant price hikes in January, warning that inaction could lead to a prolonged and more severe crisis.
Recent figures from the BBC revealed that a 16% rise in domestic energy prices is anticipated in the new year, affecting 20 million households on variable tariffs subject to the regulator Ofgem's price cap. Prime Minister Andy Burnham stated that the government is considering measures to alleviate the pressure on households.
Households in England, Scotland, and Wales on variable energy tariffs set by Ofgem experienced a 4% price increase at the beginning of October. This increase translates to approximately £60 annually, or £5 monthly, raising the typical annual bill for a household using both electricity and gas to £1,723 if sustained for a year. However, forecasts from consultancy Cornwall Insight suggest that the typical annual bill could rise to £1,999 in January.
Energy UK acknowledged that the government has provided some support, including a VAT cut on electricity bills and the cancellation or shifting of certain levies into taxation earlier this year. Nonetheless, the trade body indicated that these savings have been negated by high wholesale prices, which have been influenced by international events, including conflicts in the Middle East and disruptions in shipping through the Strait of Hormuz. They noted that bills are escalating similarly to 2022, when prices surged due to the impact of Russia's invasion of Ukraine.
Dhara Vyas, chief executive of Energy UK, emphasized the urgency of intervention, citing increasing customer debt that now adds an average of £67 annually to everyone's bills. Vyas remarked, "We cannot afford to wait for the same scale of crisis before acting again. We must heed the lessons from that time."
Simone Rossi, CEO of EDF Energy, warned that the UK is "walking into a second energy crisis," and Vyas reiterated the need for action before bills rise further. She cautioned that last-minute emergency measures could be poorly targeted and ultimately more costly.
Energy UK has proposed several government measures, including: - Targeted support beyond the £150 Warm Home Discount for people on benefits, leading to a discounted social tariff. - A debt relief scheme for severely affected households to prevent debt accumulation among new tenants and homeowners. - The removal of more levies from electricity bills, shifting them to taxation as part of a broader electrification strategy.
Adam Scorer, chief executive of the charity National Energy, which advocates against fuel poverty, expressed agreement with Energy UK's analysis, stating, "[The increase in debt is] not more people getting into debt, that's more poor people getting into more serious levels of debt." He added that without addressing this issue, there is no viable path forward for households struggling with debt.
At the recent Labour Party conference, Prime Minister Andy Burnham acknowledged the severity of the situation regarding home energy costs and fuel prices, stating, "We're looking at any measure that can give people breathing space, that can take the pressure off."