Experts are warning that higher energy prices will leave people dangerously cold and hungry this winter.
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Peoples’ health and even lives will be at risk this winter, experts and charities are warning, unless the government does more to help households struggling to pay soaring energy bills.
UK households are facing a jump in energy prices in October which will cost a typical customer an extra £130 a month to heat and light their home.
Forecasters say another £380 could be added to monthly bills next spring.
Pressure is growing on Liz Truss and Rishi Sunak to outline further support.
The two candidates for leadership of the Conservative Party have both pledged more help but are waiting until the contest has been decided on 5 September before providing details.
Money Saving expert Martin Lewis warned that without extra support, some people will face health problems because they couldn’t afford to heat their homes.
“I am begging and praying and pleading that there is more government help this winter so that people do not die,” he said.
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The personal finance specialist said he was seeing panic already amongst people worried about paying their bills as prices rose. Rising prices were a catastrophe that needed addressing immediately, he said.
Charities have also responded with warnings.
“Children are at serious risk from today’s announcement and could spend this winter in cold homes,” said Becca Lyon, head of child poverty at Save the Children.
Katie Schmuecker, principal policy adviser for the Joseph Rowntree Foundation a charity which focuses on poverty, warned that soaring prices would “plunge many into destitution”.
“It is simply unthinkable that the price rises announced today can go ahead without further government intervention on a significant scale,” she said
How much are prices rising?
- The price cap, set by the regulator, Ofgem, is rising 80% in October
- A typical annual bill paid by direct debit is currently £1,971. In October that will rise to £3,549
- Prepayment meter customers will pay an extra £59 a year from October, taking the new typical bill on a prepayment meter to £3,608
- The new cap is in effect from October to January, after which it is expected to rise further.
Analysts at Cornwall Insight have predicted the cap will climb to nearly £5,400 in January, before rising another £1,200 three months later.
Jonathan Brearley, chief executive of Ofgem, the regulating body for energy sector, said the predictions should be treated with caution as the current global volatility could “change massively” but he agreed that the next prime minister needed to “act urgently and decisively to address this”.
He told the BBC: “All of us, with the government, need to get ahead of this problem and manage it on behalf of customers because the outlook for winter without any action looks very difficult indeed.”
The Tory leadership rivals Liz Truss and Rishi Sunak have both pledged further direct help, on top of the £15bn support package the government announced in the spring, but neither have been explicit about the details.
Chancellor Nadhim Zahawi said he knew the new price cap would “cause stress and anxiety for many people” but said he was “working flat out” on options for further support.
Labour and the Libdems criticised the government for failing to respond to the growing crisis.
LibDem leader Ed Davey said the energy price rise was “nothing short of a catastrophe for millions of families and pensioners”.
Shadow chancellor Rachel Reeves said the announcement would “strike fear in the heart of many families, and force many to make unthinkable choices this winter.”
She called on the government to freeze gas and electric energy prices through winter.
The rise in consumers’ bills follows sharp rises in wholesale largely due to the conflict in Ukraine which has reduced supplies of russian gas.
Businesses are not covered by a price cap and many face cost pressures that could be passed on to consumers in higher prices.
Prices have also been rising in Northern Ireland, where there is no cap owing to the limited number of suppliers.
Now we know the size of the problem – what is the solution?
The current support on offer – £400 for all households with an additional £650 for people on qualifying benefits – was announced when bills were expected to hit £2,800 this October. We are clearly well beyond that and with wholesale prices surging back near record levels, there is worse to come.
The current Chancellor Nadim Zahawi has dismissed proposals by the Labour Party to freeze all bills at the current level for six months and a plan by the energy industry to freeze them for two years as being untargeted as they offer the same relief to better-off households.
He said the government was working on its own proposals for the new prime minister to consider, which would include support for businesses who are not covered by the energy cap.
Former chancellor and Tory leadership hopeful Rishi Sunak has said he will cut VAT on domestic energy and provide further targeted support for needy households while rival Liz Truss has indicated that she will help but has been less clear about how she would deliver it.
Up to now she has favoured helping households through tax cuts but critics point out that would do little to help people on the lowest incomes. One thing is clear, how the next prime minister tackles the biggest cost of living crisis in living memory will be the first, and probably defining, challenge of their time in Number 10.
‘I’m living on nothing’
Among those already struggling with their finances is Marina Keohane, from Gainsborough in Ipswich, who said the thought of higher fuel bills this winter brings tears to her eyes.
“To actually fear every day how you’re meant to live, that’s just something else. I’m living on nothing,” she said.
“I don’t use anything, the only thing that’s on all the time is the fridge freezer. I have a TV on, I don’t have the light on – I sit in darkness.
“Eating wise, I’m scared to use my cooker. It’s electric and obviously if you put something in the oven it uses more [energy] so I try to stick to ready meals in the microwave or do salads.”
- Read more of Marina’s story – part of the BBC News Counting the Cost of Living series
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