Founder of MoneySavingExpert Martin Lewis has predicted a 'financial cataclysm' for people in the UK this winter after the latest news - which he described as 'sickening'. Martin was speaking in a video open letter top the candidates vying to be the next leader of the Conservative Party, and the next Prime Minister.
Martin said a 'financial timebomb' will explode in September thanks to the next hike in energy bills.
He said: "The winter coming is going to be bleak. I believe unless action is taken, we are facing a potential national financial cataclysm." He has urged who wins the contest to take 'preventative action' adding: "The debate seems to have mostly ignored the fact we are sitting on a financial time bomb that's due to explode in September. And those candidates, in truth, are the only ones with a chance of defusing that catastrophe."
Martin was speaking after the latest predictions said the energy bill price cap looks set to go up another 65% in October - which he described as 'frightening' and 'sickening'.
Martin said: "For predicting the price cap, I use the analysts Cornwall Insight and their latest predictions are frightening. Remember, in April, the price cap went up 54%. Taking somebody on typical use to £1,971 a year.
"Now, typical use is just my way of showing you the scale of prices. Everything is different. So, for individuals focus on the percent, but for society, we can look at the typical use figures.
"On the first of October - and this is a strong prediction because the October cap is based on wholesale prices from February to mid-August, so we're most of the way through that - the awful, sickening news is that it's now predicted to rise 65% again, taking the bill for somebody on typical use to £3,240 a year. And that may be a conservative estimate because it keeps going up.
"Now, we'll know the exact number by the end of August. And that means that on the 5 September, when our new Prime Minister is scheduled to take office, the direct debits will already be increasing by 65%. Someone who pays £100 a month now will start to pay £165 a month. Somebody who pays £200 a month now will start to pay £330 a month."
Martin said bills look set to go up, again, next January adding: "Next April we'll still be paying on typical use over £1,000 a year more than we are now."
Martin said: "To put that into perspective, that means from October, typical energy bills will cost over a third of the new state pension and more than a third of those on the old state pension. Well, it's just not affordable. And remember, the £400 reduction that is due to come off all bills in October - it was announced in May by the former Chancellor and Conservative leadership candidate, Rishi Sunak - well, that help has already been swallowed up.
"The increase in the prediction from when that was set in May, then they thought October would be £2,800. Now we're looking at £3,250. That £400 has gone, just by the increase in the prediction alone.
"Of course, on top of that, there's more money available for those on means-tested benefits, those on the state pension, and people with disabilities. Yet the amounts being given were all based on where we were back in May. And that is not enough now. Remember that direct debits will be rising before the new Prime Minister is in situ. And that means people will be panicking, there's a risk to mental as well as physical health. "
"These rises are unaffordable for many on the lowest incomes. And while tax cuts will help some people (I’ll leave the inflationary risk to others), for those at the bottom end of Universal Credit and many state pensioners, the rises, when added to the increasing costs of food and transport and other inflation means they'll be back to that choice between starving and freezing.
"This winter, we're going to need warm spaces. Public buildings, local councils, universities, and libraries will need to open their doors and invite people in to keep warm because they can't afford to put their own heating on.
"And to the Conservative Party candidates, you need to understand the level of feeling out there. When I've talked about this on social media, and I have a decent following, and people's eyes are opened, the biggest response is actually people suggesting civil unrest, primarily in the form of mass non-payment. And I think that unrest is becoming a plausible outcome unless we see you get a handle on this."
Martin also said the next Prime Minister needs to tackle spiraling mortgage costs and credit card debt, as well as buy now pay later rules. He said: "And there's much more I could talk about. The explosion of buy now, pay later and the fact that won't be regulated now until 2023 after the hardcore cost of living crisis, petrol prices, the lack of regulation on heating oil and LPG, the food prices in the shops.
"But hopefully the picture I've painted sets the scene of what's coming. And remember too, it's all very well to talk about inflation dropping, but that doesn't mean prices will go down or back to where they were. All it means is they'll stop rising as quickly.
"To individuals listening to this, if you've got financial room to manoeuvre, you need to be battening down the hatches now. Re-doing budgets and being prepared to use savings.
"But as a nation, we have a problem with financial capability and financial resilience. And to that, to weather the coming storm, I speak directly to those candidates: this cost of living issue needs to be at the front and centre of the debate. More intervention and action is needed and it needs to be quick. This is a hard deadline coming. Without more action, I worry lives could be lost."
