Millions of families face uncertainty
The latest Ofgem energy bill price cap rise announcement will be yet another crushing blow for millions of households across Greater Manchester and the UK. It will rise to £3,549 in October, regulator Ofgem has announced.
This means the yearly gas and electricity bill for the average household will rise from from £1,971 - more than 80 per cent. Energy bills will be around £2,300 more than a year earlier.
The price cap, which determines the maximum amount of money energy suppliers can charge consumers for energy, will come into full effect on October 1 and will remain in place until December 31 when Ofgem will adjust the amount once again. Now many are warning that the change to the price cap will impact a vast number of households across the country.
READ MORE:Energy price cap will rise to £3,549 in October, Ofgem announces
Jonathan Brearley, Ofgem CEO, said the Government would need to add to the support it announced in May when bills were only expected to jump to £2,800.
“The Government support package is delivering help right now, but it’s clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year,” Mr Brearley said. We are working with ministers, consumer groups and industry on a set of options for the incoming prime minister that will require urgent action.
“The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.”
Labour shadow chancellor Rachel Reeves said urged the government to act to protect the public from soaring energy bills.
She accused ministers of being nowhere to be seen on the morning of the announcement. Appearing on BBC Breakfast, the Labour MP said people are “worried sick” about what is happening and is “striking fear in the hearts of families right across the country”.
She called on the Government to freeze energy fills and follow Labour’s own proposals. “The fact that no government minister is available to come on your programme today is just appalling. “They are not here to give assurances they are not here to set out what they are going to do.
“That is a dereliction of duty.”
A government spokesperson said: "We know people are incredibly worried about rising energy bills, following unprecedented gas prices across the continent driven by global events, including Putin’s aggression in Ukraine and his weaponisation of energy in Europe.
"Direct support will continue to reach people’s pockets in the weeks and months ahead, targeted at those who need it most like low-incomes households, pensioners and those with disabilities. As part of our £37 billion package of help for households, one in four of all UK households will see £1,200 extra support, provided in instalments across the year, and everyone will receive a £400 discount on their energy bills over winter.
"The civil service is also making the appropriate preparations in order to ensure that any additional support or commitments on cost of living can be delivered as quickly as possible when the new Prime Minister is in place."
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Labour’s West Midlands assistant police and crime commissioner Tom McNeil has “serious fears” crime will “spike” because of the cost-of-living crisis, criticising the Government for a lack of emergency budget measures.
Mr McNeil said: “Today’s news that the typical household energy bill could rise to £3,549 is devastating for families across the region.
“The fact that no emergency budget has been called to bring in measures to combat this has left me with serious fears of a spike in crime.
“I have repeated my concerns that the cost-of-living crisis is going to push people into desperation.
“While there is absolutely no excuse for crime, we have to be realistic that poverty and desperation will mean more young people are exploited into drug dealing and other crimes.”
Boris Johnson has said that eventually energy bills will come down as Vladimir Putin’s ability to “exercise leverage over us and the rest of the world will diminish”.
The Prime Minister told broadcasters during a visit to South West London Elective Orthopaedic Centre in Surrey: “I think that we will do everything we can to help.
“We want to make sure that we get people through the next few months, and we can, and we will because we took the right steps. We have a big, big package of help and support.
“But the message I want to get over to people is that I’m afraid that there’s a global spike in energy costs driven by Putin’s aggression in Ukraine.
“Putin’s position, Putin’s ability to blackmail, to exercise leverage over us and over the rest of the world will diminish week by week, month by month, and we will get through this and in the end, we will be in a much better position.
“The other side will have more of our own UK energy to rely on, and the bills will eventually come down.”
Boris Johnson has said he does not think the Government should “cap the whole thing” for “the richest households in the country”.
Speaking to broadcasters during a visit to South West London Elective Orthopaedic Centre in Surrey, the Prime Minister addressed today’s energy cap announcement and what the Government is doing to support households with rising energy bills.
He said: “We want to target the households so most of the money will go to the eight million most-vulnerable households, that’s the right thing to do. A lot of money will be going to absolutely everybody.
“What don’t think we should be doing is trying to cap the whole thing for absolutely everybody, the richest households in the country.
“This will go on for a few months and it will go on over the winter.
“And it will be tough – and I’d be very clear about that – but in the end, we are also putting in the measures we need to ensure that we have the energy independence to get through this.
“And we are putting in more nuclear, and we are putting in more wind power. We have already seen a 26% increase in British gas now from the North Sea.
Prime Minister Boris Johnson has said the Government will announce “extra cash” in September to support households during the energy crisis.
Speaking to broadcasters during a visit to South West London Elective Orthopaedic Centre in Surrey, he said: “Of course, we could see this coming (energy bills rising) and that’s why we’ve put the steps in place that we already have.
“And don’t forget that, although there will be more announcements next month, more cash coming from September onwards, you shouldn’t forget that the pipeline of cash stretches out throughout the autumn.
Sir Keir Starmer has said it is “absolutely unforgivable” that the Government is “missing in action” during the cost-of-living crisis.
The Labour Party leader asked Prime Minister Boris Johnson “where are you?” as it was announced on Friday that the energy price cap will rise to £3,549 a year.
He told reporters: “I do think the Government has to take responsibility in a situation like this.
“But on the cost of living crisis you’ve got a Prime Minister who insisted on staying in office, recognises there’s a problem with energy prices, shrugs his shoulders and does nothing about it.
“You’ve got two leadership candidates who are fighting with each other about how appalling they have been in government, but neither has come up with any plan to deal with this problem. Unforgivable.”
Sir Keir added: “My challenge for the Government is where are you? Join us in this challenge and do something about it because at the moment being missing in action is absolutely unforgivable.”
The Chancellor suggested that the public does now need to look at how they use energy.
Speaking to broadcasters, Nadhim Zahawi was asked if people should start reducing their energy use.
He said: “The reality is that we should all look at our energy consumption. It is a difficult time. There is war on our continent.
“Very few people anticipated war. Wars happen in far-flung places. It is now here with us. We have to remain resilient. My responsibility is to deliver that help.”
'The rise is driven by the cost of buying gas on the wholesale market, which has been at record levels for about a year'.
The Chancellor denied that there was a lack of action from Government amid the Tory leadership contest.
It was put to him by broadcasters that it was “intolerable” to “leave people in the dark” at the moment.
Nadhim Zahawi said: “That sounds like we’re not acting on this.”
Setting out the work of his team over the last month, he said: “We know (Vladimir) Putin has now worked out that actually this is quite a potent lever. You look at what’s happening in Germany and the rest of Europe.
“We need to make sure there’s more support. My preference is for it to be targeted.
“Why? Because it will give us a much longer, more leeway, to be able to face down Putin and send a very important message to him that this is not going to work.”
Nadhim Zahawi has said that his aim is to make sure vulnerable UK households are “resilient through next year”.
The Chancellor declined to give specifics about what a package of funding might look like, but insisted that the Treasury was working on proposals to present to the next Prime Minister.
Mr Zahawi is not expected to retain his portfolio if frontrunner Liz Truss wins the contest to replace Boris Johnson.
“We know we need to do more because actually the most vulnerable households have no cushion, have nothing available to them,” he told broadcasters.
“So what I’m looking at is how I can target that help for those people, not just to January, but we need to make sure that we’re resilient through next year.
“More help is on its way because we know that the most vulnerable households need that additional help. And I’m doing the work to make sure that that will be in place throughout next year.”
The boss of Ofgem said the regulator has had countless meetings with the current Government, and called on the next prime minister to take decisions to “match the scale of the problem” as energy bills are set to soar 80% from the start of October.
“This is a major issue for the country next year. This is a major set of decisions that the new government will need to make, that the new prime minister and his or her ministerial team will need to make,” Jonathan Brearley said on a call with reporters.
He added: “It’s not for me to comment on the proposals that are out there for politicians.
“My point is very simple, it is going to need to be taken urgently and it’s going to need to be decisive.
“And it’s going to need to match the scale of the problem that we see – which version of that that the Government chooses to pursue really is a matter for them.”
Nadhim Zahawi has said the Government knows it has “got to do more” to support households through the energy crisis.
It comes as it was confirmed that the energy price cap will rise by 80.06%, prompting grim warnings for the winter ahead.
The Chancellor also indicated that the crisis would not be temporary, suggesting that it could last well into next year.
He said that help from the Government is coming but admitted: “We know that’s not enough. We’ve got to do more.”
“We need to make sure that this isn’t a sticking plaster, that for the long term we continue to help the most vulnerable who have no cushion. And that’s what I’m determined to do.
“And we’re working up those options for both households and for business for the incoming prime minister on the 5th of September to take those decisions.
“So my message today is we’ll get this £37 billion to people to help them for now, and then more will be coming because we know this will continue in January and of course on to April and next year and we have to remain resilient.”
Emma Pinchbeck, chief executive of Energy UK, said the new price cap will be “really scary” for a lot of people and businesses across the country.
She told Sky News: “This is a crisis that has been caused by the international gas market and so we need to tackle that at a systemic level, as well as making sure that people have urgent help right now.”
She added: “We need something that is broad-brush that supports vulnerable people and really tackles what will be a massive cost-of-living crisis, but also something that helps middle income households and the wider economy.”
Addressing politicians, she said: “This is bigger than you think that it is. This is a whole-economy problem.
“This is urgent and we need to do more than you think that you need to do, and you need to do it now.”
ScottishPower chief executive Keith Anderson, said: “The size and scale of this issue is truly catastrophic for UK households and that’s why only a big solution can tackle it once and for all to shelter people from the worst this winter.
“We have offered Government a plan, backed by the industry, that can be delivered this year, tailored in line with their priorities and will support the UK economy.
“With the cap set at £3,549, what billpayers need now is to hear what additional help is coming.”
Matthew Reed, chief executive of end-of-life care charity Marie Curie, said: “Terminally ill people could freeze to death this winter without further support.
“The need to stay warm to keep pain at bay and power specialist medical equipment means that energy bills for some terminally ill people will be thousands of pounds higher than the average household.
“Many won’t be able to afford this. With 30% of excess winter deaths attributable to cold, damp housing, this could cost lives.
“Our research shows that working age people are at a huge risk of falling into poverty after a terminal diagnosis. They often have to give up work.
“They don’t qualify for their state pension. They cannot claim Winter Fuel Payments and do not automatically qualify for the Warm Home Discount scheme either.
“Dying people are falling through the cracks. They need targeted Government support now.”
Thomas Lawson, chief executive of national poverty Turn2us, said the “meteoric rise” will be crippling.
He said: “This is no longer a choice between heating and eating, but not being able to afford either.
“This is as big an emergency as the impact of Covid and needs a similarly confident Government response.
“As one of the wealthiest economies, it’s simply not acceptable to consign more than a quarter of us into poverty.
“We implore the Government to act with urgency and introduce a cap on energy costs that means that we can heat our homes and turn on the lights as we head into winter.”
Jonathan Brearley, the Ofgem chief executive, has said “there are no easy answers” to the energy crisis.
He told Good Morning Britain: “Genuinely, there are no easy answers, but there are some big decisions that ultimately ministers will need to make.”
He added: “To be honest I never imagined when I took this role that I would have to make an announcement that we made today.”
When asked about senior people in the energy industry receiving bonuses, he urged them to “be thoughtful” about their pay and remuneration.
He said: “For example, the senior Ofgem team has given away any bonuses to charity because we recognise the situation that we are in right now.”
After the energy price cap was hiked 80% to £3,549 for the average household, ScottishPower chief executive Keith Anderson, said: “The size and scale of this issue is truly catastrophic for UK households and that’s why only a big solution can tackle it once and for all to shelter people from the worst this winter.
“We have offered the Government a plan, backed by the industry, that can be delivered this year, tailored in line with their priorities and will support the UK economy – with the cap set at £3,549, what billpayers need now is to hear what additional help is coming.”
Liz Truss, the frontrunner in the Tory leadership contest, has insisted that she will “ensure people get the support needed” in the coming months after the major rise in the energy price cap.
In a statement, a Truss campaign spokesperson said: “Today’s announcement will cause grave concern to many people across the UK who will be worried about paying their bills.
“As Prime Minister, Liz would ensure people get the support needed to get through these tough times.
“She will immediately take action to put more money back in people’s pockets by cutting taxes and suspending green energy tariffs.
“This is on top of ongoing work such as the Energy Bills Support Scheme, which will see a £400 discount paid to consumers from October, and the £1,200 package of support for the most vulnerable.
“Liz will work flat-out to deliver long term energy affordability and security, unleashing more energy by maximising our North Sea oil and gas production – helping keep bills down in the future.”
H said: "I worry terribly for some of those who have disabled children or disabilities themselves who need lots of electrical equipment to keep their houses warm because of medical conditions."
Martin Lewis has said a movement to refuse to pay energy bills is “growing”, as he called on the next Prime Minister to spend billions to solve the crisis.
He told ITV’s Good Morning Britain: “I think the Don’t Pay movement is growing. There are dangers to being in the Don’t Pay movement as an individual.
“All I can say is what would happen in a typical case scenario where an individual refused to pay – what is far more difficult to predict is if there is a massive movement not to pay.
“I think what is safest for me to say is while I think it should have come earlier, my hope is on September 5 there will be a new Prime Minister. We’ve heard from both the candidates, but they seem to indicate they understand the scale of the crisis – what we need to hear is concrete solutions.
“And let’s be absolutely plain: there are many methods that you can put in place to alleviate and mitigate some of the terrible damage that the rising energy prices are causing.
“So I’m going to be agnostic over the solution, but it will involve spending substantial amounts, billions of pounds of Government money, to stop some of the most vulnerable and many middle income earners from having some terrible choices to make this winter. We have to hope that will be in place.
“And I suspect if it isn’t in place, then people coming from the Don’t Pay movement are going to become a louder voice in this country.”
A disabled man has said he will heat just one room in his home after Ofgem confirmed an 80.06% rise in the energy price cap.
Jason Alcock, 51, from Stoke-on-Trent, who has autism, ADHD and bipolar disorder, said he was “shocked” by the energy price cap rise and feared for people “on the breadline” where he lives.
“It’s crazy. There’s absolutely no way people can afford this kind of price rise. I’m shocked by it,” he told the PA news agency.
“I thought they would have pulled back on it. I thought we wouldn’t have this, what they call ‘zombie government’ with no-one in charge.
“We’re coming up to winter now. When winter starts and people can’t put their heating on… I’ll be heating one room in my house, but people have got children. The area I live in is a pretty low income area and there’s a lot of people on the breadline and they are going to suffer.
“What can you do? I am at the point where I’m trying to buy cheaper stuff but the prices across the board have gone up. I know this is happening, but what can I do?
“I’ve cancelled my direct debit for both gas and electric because they were saying I should pay something like £300 a month to cover it. So I said screw that, and cancelled it. And instead I set up a standing order, and I pay £75 into my electric and £25 into my gas per month, and I know at the end of the year there’s going to be a big bill but that’s what I can comfortably afford with other cost of living rises like the food shop and that, which has got to come first.”
Mr Lewis told ITV’s Good Morning Britain the situation is a “genuine social and financial catastrophe that is putting lives at risk”.
He went on: “I’m noticing many media organisations saying that the price cap is £3,549 a year – that isn’t correct.
“The price cap is actually a cap on the standing charges and unit rates that you pay, they have gone up by around 80%.
“The figure that’s quoted, the £3,549, is what the cap would be for someone who has typical usage – of course, most people don’t have typical usage, they’re more or less. That means there is no maximum amount that you can pay for gas or electricity.
“You could easily be paying £5,000 or £10,000 a year if you have high usage.
“I worry terribly for some of those who have disabled children or disabilities themselves who need lots of electrical equipment to keep their houses warm because of medical conditions.”
The StepChange debt charity said a third of its new clients were in energy arrears in July, before the latest rise, and this could rise to more than half after the next price cap increase in January.
Chief executive Phil Andrew said: “Household budgets are being pushed to the absolute limit and it’s inevitable this will lead to more people experiencing debt.
“The demand for debt advice is rising across the sector as the cost-of-living crisis bites.
“Many of our existing clients are also having to amend their arrangements as they can no longer afford their previous payments.”
Consumer champion Martin Lewis has said energy prices will be “unaffordable” this winter.
He told ITV’s Good Morning Britain: “The prediction now in January is up another 51% on top of where we are now and that would take a typical bill and direct debit to £5,386 a year.
“And that is not such a crystal ball prediction because we are seven months through the 10-month assessment period for the January price cap. ”
Mr Lewis added: “So if we look at the totality across the winter, from October until March, you are probably talking on typical use an average bill of over £4,400 a year, typical pro rata – it is totally unaffordable.”
Many of readers have had their say - and it's fair to say they're not happy.
Both have promised to help as families face an uncertain winter. More HERE.
Ofgem chief executive Jonathan Brearley said the gas price this winter was 15 times more than the cost two years ago.
He told BBC Breakfast: “When I look at what… gas now costs this winter, it is 15 times the normal price that we were expected to pay two years ago.
“Now if that were happening in petrol, it would cost us £400 to £500 just to fill up our car. So because those costs are changing, the price needs to change and that’s why the price cap is now changing to £3,549”.
When asked why Ofgem was not protecting the consumer by having a lower price cap, he said: “The reason we don’t have a lower price cap is because if the companies cannot recover the amount of money it costs for them to buy the energy, then ultimately, they will be unable to function.”
“They would have been unable to give us the energy that we need.
“So what the price cap does, and this is really important, it stops those companies charging excess profits over and above the cost of energy.
“But what it can not do is set a price that is less than the cost of the energy that we buy, and that’s why we have to make the change that we are making today.”
Mr Brearley added that it was “devastating news” for many families.
The trade body for energy suppliers in the UK has said the charges its members will be forced to pass onto households will be “simply unaffordable”, after Ofgem hiked the price cap by 80% from October.
“This rise, while widely predicted, will be hugely worrying to customers. We know many customers are already struggling with energy bills and other costs and for millions of households, these latest increases will be simply unaffordable,” Energy UK’s director of regulation Dan Alchin said.
“The rise is driven by the cost of buying gas on the wholesale market, which has been at record levels for about a year now – with prices this week 10 times what they were before the crisis.
“These costs are out of the control of energy retail suppliers who need to recoup them, otherwise we risk more going out of business in addition to the 30 that have done so since last August – causing huge cost and disruption to customers.
“However bills of this size were unimaginable a few months ago and we cannot expect customers to bear the brunt.
“Retail suppliers will continue to do all they can to offer help and support, especially to their most vulnerable customers, but faced with bill increases of this size and the numbers of customers who will need support, it won’t be enough.
“The Government must step in urgently and put in place further support for this winter and with energy costs likely to remain high for the foreseeable future, look at ways to keep bills down next year as well – as we outlined in our letter to the Chancellor last week.”
Families are facing one of the “bleakest Christmases” for years, a charity which supports the vulnerable said.
Rossanna Trudgian, head of campaigns and public affairs at Action for Children, said in a statement: “Today’s announcement, and warnings of even worse rises to come next year, makes it clear that the country is facing a national emergency. The families we support are already under enormous pressure and are now set to face a relentless wave of energy price hikes and inflation all while coping with the colder weather.
“We are seeing more and more frightened families who are reaching crisis point. Some parents are coming to us in tears, terrified about how they are going to feed their children, with some missing rent payments so their child can have a meal – one family has even resorted to taking seats out of their car to save on fuel. Many of these families have already cut back to the bone and have nowhere left to cut.”
“They are facing one of the bleakest Christmases in recent years. The next prime minister must provide emergency relief to struggling parents by committing to further targeted support for low-income families through the social security system. Families with children also face higher costs, so it is vital that any financial support takes into account family size and need.”
Chancellor Nadhim Zahawi said the increase in the energy price cap would cause “stress and anxiety” for people but that the Government was working to develop more options to support households.
“I know the energy price cap announcement this morning will cause stress and anxiety for many people, but help is coming with £400 off energy bills for all, the second instalment of a £650 payment for vulnerable households, and £300 for all pensioners,” he said.
“While Putin is driving up energy prices in revenge for our support of Ukraine’s brave struggle for freedom, I am working flat out to develop options for further support.
“This will mean the incoming prime minister can hit the ground running and deliver support to those who need it most, as soon as possible.”