Rising worries: Oxford Street bathed in Christmas lights for the festive season. Soaring energy tariffs have been a driver of inflation and the cost of living crisis in Britain, a key issue for voters in the July general election. — Bloomberg
LONDON: The United Kingdom’s energy price cap will rise 10% in October, pushing up bills for millions of homes just as the winter heating season begins.
The level will increase to £1,717 from Oct 1, according to figures released last Friday, and is driven by higher power and gas prices in wholesale markets. Price caps are revised every three months by the regulator Ofgem.
Chancellor of the Exchequer Rachel Reeves is likely to face criticism as the bill increase coincides with new rules limiting the number of pensioners eligible for heating subsidies in winter.
The cap, which represents an annual bill for a typical household, is expected to rise again by about 3% in January, according to Cornwall Insight Ltd.
That would mean two consecutive hikes – making it even harder for the new government to fulfil the election promise to lower bills.
Soaring energy tariffs have been a driver of inflation and the cost of living crisis in Britain, a key issue for voters in the July general election.
“The rise in the price cap is a direct result of the failed energy policy we inherited, which has left our country at the mercy of international gas markets,” Secretary of State for Energy Security and Net Zero Ed Miliband said in a statement.
Prime Minister Keir Starmer has presented the new state-owned energy company, Great British Energy, as a solution for lowering bills by investing in renewable energy supply. But building new infrastructure isn’t a quick fix and it could take years for the benefit to be felt.
The Bank of England (BoE) expects inflation to accelerate this year. After falling to the 2% target over the summer, it is now forecast by the BoE to reach 2.7% by the end of 2024 before easing again.
Energy poverty charities have been sounding the alarm since Reeves announced that some pensioners will miss out on a subsidy known as the Winter Fuel Payment, with only those on means-tested benefits being able to claim.
A report from influential charity Citizens Advice found that a 10% increase in the price cap would mean an estimated 25% of UK residents would consider turning off their heating and hot water this winter.
Debt levels among customers are still at record levels according to Ofgem, despite bills dropping from the peaks seen during the energy crisis. — Bloomberg
