MILLIONS fear today’s Ofgem price cap rise will confirm our worst fears – energy bills are going through the roof and the majority of households will struggle to pay them.
It is galling that the huge increase to our annual costs — a trebling to £3,600 from October — will hit just as the temperature drops.
The huge increase to our annual costs — a trebling to £3,600 from October — will hit just as the temperature drops
For many households, it won’t just be a case of sticking on another jumper — it will force desperate choices: Skipping meals, scrimping on washing or running up huge debts.
Debt charities say one in three Brits will not be able to afford to pay their energy bills in full come January.
And those on pre-payment meters will be having to top up by £15 every other day rather than once a week, as we reported this week. How can that work?
Unless the Government comes up with a big solution, and fast, there will be small firms going to the wall, rising unemployment, destitute households and a huge knock-on effect on our already creaking health system.
It is for this reason there has been a chorus of business leaders and debt charities calling it a national emergency that could have a more devastating toll than the pandemic.
The problem is there is no easy solution, because energy prices are set on global markets, which have soared upwards due to a Russian madman who is as unpredictable as a virus variant.
Yesterday, British Gas volunteered to donate ten per cent of its retail energy profits to households for the duration of the crisis.
But it will be a drop in the ocean in parent company Centrica’s total £1.32billion half-year profits and it has been criticised as a publicity stunt by rivals.
The truth is that you could add a nought to that giveaway and it still wouldn’t touch the sides of the issue.
However, it does show a sense of awareness of the simmering public anger about energy companies’ huge profits at a time of human misery caused by Russia’s weaponisation of energy.
It would be good if more companies acknowledged this — here’s looking at you Shell and BP.
The problem is that it is not just the poorest families on benefits facing this crisis — the cost is unaffordable for one in three of us — around 22million people — in Britain.
The crisis has prompted some chin-stroking about how to overhaul our energy market — potentially scrapping the price cap altogether, or separating electricity from gas and oil, which would mean renewable power would not be soaring in price, too.
However, energy sources say all of the above is too tricky to untangle by this winter and urgent help is needed now.
A profit cap on energy firms is one idea that has been floated — but what level would be set and how palatable is that to likely new Prime Minister Liz “no windfall tax” Truss?
NO SIMPLE ANSWER
There is an idea that a social tariff — costing an estimated £15.4billion — would reach more of the households in need than the blanket energy bill freeze proposed by Labour.
The energy industry, meanwhile, has been vocal in support of a plan to freeze bills for two years at around £2,000 and have taxpayers pay back the difference over ten years.
It would be quick to do. But it would also mean a whopping £100billion hit to the public purse — more than the furlough scheme.
It is increasingly clear there is no simple answer to this crisis. But failure to anything would be catastrophic.
Additional reporting: Tara Evans
WHAT IS HAPPENING?
Today, Ofgem will reveal the new price cap on energy bills, which takes effect from October.
Analysts predict it will hit £3,500, rising again in January to £4,200.
It means your supplier will be upping your direct debit and your bills are going to increase very soon.
WHAT SHOULD I DO IF I CAN’T PAY?
Millions won’t be able to afford the cost of their electricity or gas this winter. If this is you then talk to your supplier straight away.
Don’t cancel your direct debit – it will likely just cause your bills to go up more in the long run.
Plus, you may end up in extra debt and your energy firm could force you to install a more costly prepayment meter.
If you already have a pre-payment meter, speak to your supplier about emergency credit.
CAN I GET ANY OTHER HELP?
Yes. The Government has provided some support – but it isn’t enough.
There is a £400 energy bill rebate which comes off your bill in chunks from October over the next six months, if you pay by direct debit.
If you pay when you get your bill, it will be added as credit to the account.
Those on pre-payment meters will have to claim vouchers to get the discount.
‘I WILL HAVE TO CUT RESTAURANT HOURS’
DAVID FOX, 56, opened his first Tampopo restaurant in Manchester 25 years ago.
After expanding to five sites across the country he is now having to consider opening only part of the week because electricity bills have become unaffordable.
David Fox, 56, opened his first Tampopo restaurant in Manchester 25 years ago
Two years ago he would pay £325 a week on one site, but now he is being quoted £3,557 a week – a ten-fold increase.
It means he would need to have sales of £850 just to pay for the electricity and £2,180 a day to cover rent, insurance, rates and wages.
Mr Fox said: “It’s horrific. If I don’t think I’ll make £3,000 a day it would be commercial suicide to open.
“I’ll have to reduce the opening hours and only operate a few days a week, which has the knock-on of staff, suppliers and the VAT we will pay.”
‘WE WORK BUT WILL BE UNAFFORDABLE’
WORRIED mum-of-four Jude Scott says that this winter is “looking bleak” for her family as their energy bills are set to increase to an unaffordable amount.
The 44-year-old office manager lives with partner Stewart, 44, and their four young sons, Jesse, Isaac, Joseph, and George, in Battle, East Sussex.
Mum-of-four Jude Scott says that this winter is ‘looking bleak’ for her family as their energy bills are set to increase to an unaffordable amount
They have already seen their energy bills rise from £163 per month to £446, and are £1,000 in debt to their supplier, Octopus.
But if analysts’ predictions are correct, come October her bills will jump to £800 a month.
She said: “We are going to have to drastically cut our energy use and talk to the children about what we can afford.
“Our youngest likes to keep the light on at night, but we’ll have to talk to him about that.
“We won’t be able to afford fun activities.”