The Government will have “blood on its hands” unless it acts urgently to tackle a surge in energy prices, as watchdogs warned average bills will leap to £2,800 this winter.
The head of energy regulator Ofgem today wrote to Chancellor Rishi Sunak to alert him that, as it stands, its price cap for 23 million households will surge by another £829 in October.
Jonathan Brearley told MPs any such hike could see the number of households in “fuel poverty” nearly double from 6.5 million to 12 million.
“We know this is going to have a huge impact for households,” he admitted.
Ofgem also warned soaring levels of energy debt, already at £1.3billion, were set to spiral even higher, along with the number of customers “self-disconnecting” because they cannot afford heating or power.
Andy McDonald, Labour MP Middlesborough, slammed Business Secretary Kwasi Kwarteng as he appeared before a parliamentary committee to defend the government’s efforts to help households.
He fumed: “In constituencies like mine people will die of hypothermia this winter in their own homes and thus far I have not heard anything that is up to the urgency or the scale of the situation that we are in.”
Ofgem’s price cap is designed to limit how much households on standard tariffs and pre-payment meters can be charged.
In April 2021, the cap rose to an average of £1,138 a year, then went up again to £1,227 last October.
But the big surge came last month, when the average rocketed by 54% - £693 - to £1,971 a year, driven by a spike in wholesale costs fuelled by Russia ’s invasion of Ukraine.
“We are expecting the price cap in October to be in the region of £2,800,” Mr Brearley told the Business, Energy and Industrial Strategy Committee, echoing a recent Bank of England forecast.
The figure could be lower if the crisis in Ukraine is resolved quickly, Mr Brearley said, but if not: “It is quite possible it could go higher.”
It means average energy bills could surge by nearly £1,600 in the space of just 12 months.
Ministers have yet to announce new help, despite mounting evidence of the trauma caused by the recent wave of energy price hikes and amid a tsunami of other increases from the cost of living crisis.
Mr Kwarteng pointed to £9.1billion of measures announced by Mr Sunak in February, including a £150 council tax rebate for many households, plus a planned £200 per household this October - to be repaid.
Pressed on what further action could follow, Mr Kwarteng relied: “We have to wait and see what is forthcoming.”
Committee chairman Darren Jones shot back: “Do you think bill-payers are happy with that answer, just wait and see?”
The Government’s stalling, and flip-flopping on a possible windfall tax on energy giants, drew fresh criticism.
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, warned of the “hidden cost of the UK Government’s continued inaction”, including the increased pressure on the NHS from those with health conditions affected by damp properties and excess winter deaths caused by cold homes.
“Unless the Government acts now, it will have blood on its hands this winter,” he said
Adam Scorer, chief executive of National Energy Action, said Ofgem’s warning would strike terror into the hearts of millions of people, already unable to heat and power their homes.”
He went on: “It will plunge households into deep, deep crisis.
“The financial, social and health impacts are unthinkable.
“The Government simply must act and use the welfare system and schemes such as Warm Homes Discount to get significant financial support to people before winter.”
He also called on Ofgem to introduce a below market rate social tariff as soon as possible.
The TUC said official estimates show energy bills could soar 23 times faster than wages, and 38 times quicker than benefits.
General Secretary Frances O’Grady said: “Millions of families are already at breaking point.
“But now they face even more bill hikes, while ministers do nothing to make sure wages and Universal Credit keep pace.
“The Chancellor must provide more help to families now.
“We need an emergency budget – it’s time to get on with it.”
Gary Smith, general secretary of the GMB union, said: “If Jonathon Brearley is right, this whopping increase in the energy price cap will turn a cost of living crisis into a catastrophe for low paid workers.
“Millions of carers, school staff, NHS employees, retail workers, and more will be plunged into fuel poverty.
“Meanwhile the Chancellor and Prime Minister do nothing – hamstrung by their own squabbles.
“At exactly the time we need firm leadership and action, this administration is asleep at the wheel.”
Mr Kwarteng used today’s hearing to defend the decision to continue paying the co-founder of failed energy giant Bulb £250,000 a year.
Hayden Wood is still getting his normal salary, despite Bulb needing an estimated £2.2billion taxpayer bail-out.
Mr Kwarteng said Mr Wood was being kept on to “smooth the process” of finding a buyer for Bulb.
