Government is warned support on energy bills can’t wait as price cap rises £221
Campaigners have called for more urgent support for energy costs as Ofgem’s price cap rose by 13 per cent from July to September.
Families “cannot wait until the autumn” for targeted aid, experts have warned, as the energy price cap hit a two-and-a-half-year high on Wednesday.
The increase of £221 was due to the increase in oil prices in March following US attacks on Iran. The Middle Eastern country subsequently occupied the Strait of Hormuz, an important waterway for oil trade, which in turn caused an increase in energy costs worldwide.
This sudden increase began to decrease slightly as peace talks continued. The price of crude oil is currently around $68 (£51) per barrel, down from its April high of $112 (£84). But it remains well above the $59 (£44) seen at the beginning of the year.
This reduction is also not reflected in the new ceiling price, which was set approximately five weeks before it came into force, causing a ‘lag’ effect.
The Trades Union Congress (TUC) has called on the government to introduce a social tariff that would cut bills for up to two-thirds of households, subject to a means test.
TUC general secretary Paul Nowak said: “Today’s change to the energy price cap is a clear example of how Trump’s warmongering is affecting British families; from today households will begin to feel the pain of rising bills. And bills were already much higher than they were five years ago.”
The group said its proposals would support 8.7 million households and cut bills for the most vulnerable by up to £559. The “ultra-rich minority with huge estates” will be asked to pay more, while the majority of other households will stick to the price cap.
Funded by a windfall tax on banks, the TUC says the plans will cost £3.4bn to £5.9bn a year.
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In April, Rachel Reeves said the government was looking at targeted support for energy bills. The chancellor said it would be means tested and would probably arrive in the autumn, but he was reluctant to give further details.
It comes after energy costs for all households fell by an average of £117 from April as two bill-funded energy efficiency schemes were scrapped.
The £221 increase almost eliminates this intervention, but means bills are still lower than they would be without the measure.
Conor O’Shea, Cost of Living Action campaign co-ordinator, said of Wednesday’s increase: “Today’s energy price cap increase is another blow to households who cannot afford to pay more for basic needs.
“While the government is right to prioritize targeted support on energy bills, many families need this help now and cannot afford to wait until the autumn.”
The campaign group added that the government must deliver a response that addresses the “root causes” of the energy crisis, calling for it to nationalize elements of the distribution network and introduce a basic energy guarantee that will ensure every household can cover its costs at all times.
Minister for Energy Consumers, Martin McCluskey, said: “We know families are deeply concerned about rising energy bills due to a war we did not choose, and we are determined to fight back to tackle energy affordability.
“The action we took in the Budget, which cut costs of an average of £150 from energy bills, is now reflected in future years’ bills.
“We have also extended the warm homes discount scheme, which benefited nearly six million households last winter and will remain in place for the rest of the decade.
“We will continue to monitor the situation ahead of winter and plan for any contingencies, while also doubling down on our clean energy mission to lower bills for good.”
