Almost 10 million households could find themselves in “fuel stress” this winter if the price cap rises to around £2,800, an economic think tank said. The Resolution Foundation analysis suggested the number of families living in fuel stress – defined as spending at least a tenth of their total budgets on energy bills alone – would rise from five million to 9.6 million.
Jonny Marshall, senior economist at the Resolution Foundation, said: “UK households are set for another huge jump in the energy bills this October – just when the need to heat their homes grows – which could push up to ten million families into fuel stress. The sheer scale and depth of Britain’s cost-of-living crisis means the Government must urgently provide significant additional support.
“The fact that the crisis is so heavily concentrated on low-and-middle incomes households means it’s clear how the Government should target policy support. The benefits system is clearly the best route to support those worst affected in the short term – be that via an early uprating or lump sum payments to help poorer households get through the difficult winter ahead.
“Looking beyond this winter, these households will also benefit most from cheaper renewable energy and lower consumption from better insulated homes – showing why Britain needs to massively step up its retrofitting programme.”
Downing Street acknowledged that energy prices were a “significant challenge” after Ofgem’s chief executive Jonathan Brearley suggested the cap could rise to around £2,800 in October. The Prime Minister’s official spokesman said some of the help from the Government was “phased throughout the year”.
“Some of the support is designed to come in in October, £200 will be discounted from energy bills, the warm home discount will increase to £150 and be expanded to cover three million people, cold weather payments and winter fuel payments will be available again,” the spokesman said.
The Government was also “actively looking at what more could be done in this space, that’s something that the Chancellor and Prime Minister are focused on”.
Shadow chancellor Rachel Reeves said the prospect of the energy price cap rising to £2,800 in October is “extremely concerning and will cause huge worry for families already facing soaring bills and rising inflation”. She said: “How many more alarm bells does the Chancellor need to hear before he acts?
“The Government have got to get a grip on this crisis and to protect families and our economy.”
She restated Labour’s call for an emergency budget and a windfall tax on oil and gas giants.
Business Secretary Kwasi Kwarteng said any decisions on a windfall tax on oil and gas firms were matters for Rishi Sunak.
“I’ve been very clear about a windfall tax. I don’t think it supports investment, I don’t think it’s necessarily the right thing,” Mr Kwarteng told MPs.
“But as I always say, that’s up to the Chancellor. He sees the economy across the piece, he is responsible for fiscal policy.
“He is instinctively against a windfall tax but if he feels that these extraordinary times require extraordinary measures, that’s up to him. His judgment has been very good throughout the Covid period… and also his willingness to support very vulnerable customers, consumers, in this cost-of-living difficulty.”
