UK cost-of-living crisis worsens as energy price cap nearly doubles

LONDON: British households on Friday faced an eye-watering 80-percent hike in electricity and gas bills, in a dramatic worsening of the cost-of-living crisis before winter as the country awaits a new leader.

Regulator Ofgem said its energy price cap, which sets prices for consumers who are not on a fixed deal with their supplier, will increase from October 1 to an average £3,549 ($4,197) per year from the current £1,971.

Worse is expected to come in January, when Ofgem next updates its cap, with average bills predicted to top £5,000 — or more.

Ofgem blamed the increase on the spike in global wholesale gas prices after the lifting of Covid restrictions and Russian restrictions on supplies.

But it sparked outcry about the effect on already financially squeezed households, pensioners and the sick — and growing calls for people not to pay.

“Everybody’s gonna have trouble,” said Diane Skidmore, 72, who lives in social housing in south London and makes do on £600 a month.

She told AFP she would turn off her heating in winter and use blankets and jumpers to try to keep her rocketing bills down.

The chief executive of Marie Curie cancer care charity, Matthew Reed, said terminally ill people it helps need specialist medical equipment and warned they “could freeze to death this winter without further support”.

UK inflation is already in double-digits and forecast to strike 13 percent in the coming months due to runaway energy bills.

Inflation is at its highest level since 1982, with industrial action over pay growing, and the country is predicted to enter recession later this year.

The near-doubling in the energy cap will likely tip millions into fuel poverty, forcing them to choose between heating or eating, anti-poverty experts say.

“Some parents are coming to us in tears, terrified about how they are going to feed their children,” said Rossanna Trudgian, head of campaigns and public affairs at Action for Children charity.

More than 115,000 have pledged to protest on October 1, said the Don’t Pay action group, which wants bills reduced to affordable levels.

Ofgem boss Jonathan Brearley acknowledged the difficulties. “I talk to customers regularly and I know that today’s news will be very worrying for many,” he said.

– ‘Zombie’ government –

The rampant cost-of-living crisis has dominated the race between Liz Truss and Rishi Sunak to succeed Conservative Prime Minister Boris Johnson.

Political opponents have accused him of leading a zombie government and doing nothing to address the problem since his resignation in July.

Household and business consumers, energy suppliers and opposition politicians said urgent action is needed to avoid putting the most vulnerable in desperate situations.

A University of York study recently estimated two-thirds of UK households are at risk of fuel poverty by next year. But Johnson, who has been on holiday twice in recent weeks, has promised to leave major fiscal decisions to his successor.

The winner will not be announced for another 10 days. Foreign Secretary Truss says she favours tax cuts over “handouts” but her challenger, former finance minister Sunak, said that will worsen inflation and has instead proposing further direct support.

The government has so far offered help including £400 being taken off every household’s energy bill later this year as well as other targeted support to pensioners and those on disability benefits.

Finance minister Nadhim Zahawi told Sky News of the £37 billion support package: “We know that’s not enough. We’ve got to do more,” without giving details.

Leaders of devolved parliaments in Wales and Scotland and opposition parties have called for an immediate freeze on the price increase.

– ‘Catastrophe’ –

Anti-poverty think tank The Resolution Foundation has demanded “radical” measures to prevent “a catastrophe” this winter, warning of “serious physical and financial damage to families across Britain”.

With many poorer households relying on more costly pre-payment meters, the foundation predicted thousands could see their energy cut off entirely.

It is calling for poorer households to be offered a “social tariff” with a 30 percent discount.

Adam Scorer, chief executive of fuel poverty charity Energy Action, also told Sky News that the government must double its support package and work with the regulator to introduce a social tariff” for vulnerable households.

 

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