‘Don’t they care about us at all?’: Protesters outside Ofgem HQ in Canary Wharf chant ‘freeze profits, not people’ amid mounting public anger at energy price cap hike – as Zahawi faces backlash for urging people to RATION to save money

  • Protestors gathered outside Ofgem’s headquarters in Canary Wharf today in protest to rising energy bills 
  • Chancellor Nadhim Zahawi told broadcasters ‘the reality is we should all look to our energy consumption’ 
  • Ofgem price cap rise, announced today, will send average household’s yearly bill up from £1,971 to £3,549 
  • Today, money saving expert Martin Lewis warned people could die this winter due to high energy costs 
  • Ofgem boss insists they had to make ‘difficult trade-offs’ hiking energy price cap by eye-watering 80 per cent,

Around 100 angry protesters gathered outside Ofgem ‘s headquarters in London today chanting ‘freeze profits, not people’ amid mounting public anger over soaring bills – and after Chancellor Nadhim Zahawi warned that Britons will need to ration their energy use to save money.

Members of the crowd shouted ‘enough is enough’ and said the energy regulators ‘don’t care about us at all’ as they gathered on the street in Canary Wharf amid grim predictions about the impact the 80 per cent hike in the price cap will have on households across the UK. 

Frustrated demonstrators said Ofgem’s decision to increase the cap will plunge millions of children below the poverty line – as campaigners, including MoneySavingExpert’s Martin Lewis warned that vulnerable people will died in the coming months as a result of the cost of living cirsis.

Ten officers were present on the other side of the street, as well as security guards, with police vans lining the road outside the building.

It comes as Mr Zahawi, who is likely to be out of a job in the coming days if Liz Truss wins the keys to No10, faces a backlash for suggesting that people should be starting to ration their electricity and gas use to save money, blaming Vladimir Putin’s barbaric war in Ukraine for the biggest cost of living squeeze on British households since the 1950s.

Around 100 people gathered outside Ofgem’s headquarters in Canary Wharf, London, this afternoon to the energy regulators price cap rise. Ofgem confirmed an 80 per cent rise in the price cap which will send the average household’s yearly bill rocketing from £1,971 to £3,549

Angry protestors showed up outside the energy regulators headquarters holding signs. Here a woman holds a sign that says ‘Affordable energy now’ and the man next to her holds a sign that says ‘Eating or heating? No one should have to choose’

Ten officers were present on the other side of the street as well as security guards, with police vans lining the road outside the building. One woman’s sign read: ‘How can I pay my landlord’s mortgage now?’

More than 100 protestors gathered outside Ofgem’s HQ claiming that vulnerable people would die in the coming months as a result of the cost-of-living crisis. The protest had been promoted by Don’t Pay UK – a grassroots movement that describes its aim as ‘building a mass non-payment strike of energy bills starting on October 1’

A woman holds up leaflets calling on customers to refuse to pay their energy bills rom October 1

Police and photographers within the protestors outside Ofgem’s HQ in Canary Wharf

Around ten police officers stand on guard as demonstrators protest outside the Ofgem headquarters as protestors chant ‘freeze profits, not people’

His advice to people to start rationing their energy comes as Ofgem confirmed an 80 per cent rise in the price cap which will send the average household’s yearly bill rocketing from £1,971 to £3,549.

The move will affect 24million Britons from October 1, while the 4.5million on pre-payment meters – who are often the most vulnerable and already in fuel poverty – could see even higher average bills of £3,608.

In response to the price cap rise, more than 100 protestors turned up to demonstrate against the energy price hikes outside Ofgem’s headquarters in Canary Wharf.

Angry members of the crowd shouted ‘enough is enough’ and ‘freeze profits, not people’ as they gathered on the street.

The protest had been promoted by Don’t Pay UK – a grassroots movement that describes its aim as ‘building a mass non-payment strike of energy bills starting on October 1.’

Some masked demonstrators took to a microphone to lament the ‘exorbitant’ bills.

A woman at the protest outside Ofgem’s HQ in Canary Wharf holds a sign that reads: ‘Blood on Ofgem’s hands!’ The cap will see the average household’s yearly bill rising from £1,971 to £3,549 affecting around 24 million households

A man wears ‘the dog ate my gas bills’ t-shirt as he attended the protest in Canary Wharf this afternoon. Grassroots movement, Don’t Pay UK, is calling for a strike on paying energy bills from October 1

A woman chants ‘freeze profits, not people’ through a microphone as police officers stand nearby

Security guards and police officers stand outside Ofgem’s headquarters as man holds a sign that reads ‘people not profit’

Nadim Zahawi said: ‘The reality is that we should all look at our energy consumption. It is a difficult time. There is war on our continent’

Emotional Martin Lewis warns the Big Squeeze could be FATAL for people who can’t afford to heat their homes this winter 

Britons could die this winter due to surging energy prices, Martin Lewis warned today after Ofgem confirmed an 80 per cent rise in the price cap – sending the average household’s yearly bill from £1,971 to £3,549 from October.

The cap announcement today will come into effect for around 24million households in England, Scotland and Wales on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again.

The 4.5million pre-payment meter customers across Britain, who are often the most vulnerable and already in fuel poverty, will see an even more punishing increase – with their average annual bill set to go up to £3,608.

And things could get even worse next year, with experts at consultancy Auxilione using latest gas prices to predict that the cap will rise by another 52 per cent to £5,405 in January 2023, then by a further 34 per cent to £7,263 in April – before falling slightly, by 11 per cent to £6,485 in July and by another 7 per cent to £6,006 in October.

MoneySavingExpert founder Mr Lewis, who became emotional at times while giving passionate interviews to TV and radio shows this morning, told BBC Radio 4’s Today programme: ‘I’ve been accused of catastrophising over this situation. Well, the reason I have catastrophised is this is a catastrophe, plain and simple. If we do not get further government intervention on top of what was announced in May, lives will be lost this winter.’

The consumer champion also said the latest rise in the cap means some people will pay up to £10,000 a year in bills. And he warned that there is no cap on the maximum you pay – but the cap is actually a maximum cost per unit that firms can charge for gas and electricity. Currently, this equates to £1,971 a year for the average home.

Ofgem said that from October 1 the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 52p per kWh for electricity customers and a standing charge of 46p per day. The equivalent per unit level for a typical gas customer is 15p per kWh with a standing charge of 28p per day.

Jamie Grey, 34, a teacher from Tower Hamlets, said Ofgem ‘don’t care about us at all’.

Ms Grey said she has children well below the poverty line in her class who come from families that will be unable to pay to heat their homes this winter.

Vulnerable people will die in the coming months as a result of the cost-of-living crisis, she said.

‘I’m teaching children who live below the poverty line already. Most are on a pay-as-you-go energy tariff,’ Ms Grey said.

‘Ofgem don’t care about us. All we have is each other – historically we know mass non-payment and mass movements do work.

‘The Government have shown they do not care enough to treat us with humanity.’

Ten officers were present on the other side of the street as well as security guards, with police vans lining the road outside the building.

Asked by broadcasters if it was time for people to look at their energy use, the Chancellor said: ‘The reality is that we should all look at our energy consumption. It is a difficult time. There is war on our continent.

‘Very few people anticipated war. Wars happen in far-flung places. It is now here with us. We have to remain resilient. My responsibility is to deliver that help.’

Ofgem boss Jonathan Brearley said the regulator had to make ‘difficult trade-offs’ when setting the new price cap.

He said costs would come back to customers in the long run if companies were to fail.

Speaking to Channel 4 News, Mr Brearley said: ‘The price cap was designed to do one thing, and that was to make sure that unfair profits aren’t charged by those companies that buy and sell energy. And, right now, those profits in that market are 0%.

‘What it can’t do is it can’t say given the cost of the energy that we can force companies to get from customers less than it costs to buy the energy that they need, because otherwise they simply can’t buy the energy for those customers’

He added: ‘What we know from last year is that when companies fail those costs come back to all of us. So, over and above the price we pay, we’d be paying more to re-buy the energy for the customers that come from failed companies.

‘So we have had to make some difficult trade-offs, and we have had to make some difficult choices.’

Mr Zahawi acknowledged the increase in the price cap would cause ‘stress and anxiety’ for people, but that the Government was working ‘flat out’ to develop more options to support households.

‘While Putin is driving up energy prices in revenge for our support of Ukraine’s brave struggle for freedom, I am working flat out to develop options for further support,’ he said.

‘This will mean the incoming prime minister can hit the ground running and deliver support to those who need it most, as soon as possible.’

Today MoneySavingExpert founder Martin Lewis warned people could die this winter because they could not afford to pay for their energy. 

He told BBC Radio 4’s Today programme: ‘I’ve been accused of catastrophising over this situation. 

‘Well, the reason I have catastrophised is this is a catastrophe, plain and simple.

‘If we do not get further government intervention on top of what was announced in May, lives will be lost this winter.’

The consumer champion also said the latest rise in the cap means some people will pay up to £10,000 a year in bills. 

And he warned that there is no cap on the maximum you pay – but the cap is actually a maximum cost per unit that firms can charge for gas and electricity.

Currently, this equates to £1,971 a year for the average home.

Ofgem said that from October 1 the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 52p per kWh for electricity customers and a standing charge of 46p per day. 

The equivalent per unit level for a typical gas customer is 15p per kWh with a standing charge of 28p per day.

Ofgem’s chief executive Jonathan Brearley warned of the hardship energy prices will cause this winter and urged the incoming prime minister and new Cabinet ‘to provide an additional and urgent response to continued surging energy prices’.

He also said that the gas price this winter was 15 times more than the cost two years ago.

The regulator said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the pandemic eased, and had been driven still higher by Russia slowly switching off gas supplies to Europe.

Ofgem also warned that energy prices could get ‘significantly worse’ next year.

The regulator said that some suppliers might start increasing the amount that direct debit customers pay before October 1, to spread out payments, but any money taken by suppliers will only ever be spent on supplying energy to households.

Philippe Commaret, the managing director of energy giant EDF, has warned that half of UK households could be in fuel poverty in January as a result of rocketing prices. And the Trades Union Congress has said energy bills will rise 35 times faster than wages and 57 times faster than benefits in the last three months of this year.

Which? has urged the Government to raise its energy bills discount by at least 150 per cent or risk pushing millions of people into financial distress. The consumer watchdog said Ministers’ financial support for all households must increase from the current £400 to £1,000 – or from £67 to £167 per month from October to March.

 

The charity National Energy Action said the number of UK households in fuel poverty will have doubled in a year when the October cap rise takes effect

However, no immediate extra help will be announced by Boris Johnson’s Government, with major financial decisions being postponed until either Liz Truss or Rishi Sunak is in No 10 after the Tory leadership contest.

Can my bills be higher than the energy price cap? Will it get worse? How 80% rise will affect YOU – as it’s revealed a family of five in a four-bed home face monthly bills of £513 from October 

What is the energy price cap?

The energy price cap decides the maximum cost per unit that energy companies can charge for both gas and electricity. This is then used to calculate a typical annual bill.

The price cap was introduced in January 2019 as a way to ensure that households who do not have fixed deals – and who are, in some cases, less financially savvy – are not ripped off by their energy suppliers.

Twice a year, energy regulator Ofgem would set the maximum price that households on their supplier’s default tariff would have to pay for every unit of gas and electricity they used for the next six months.

It allowed for a small profit – capped at 1.9 per cent – that energy suppliers were permitted to take for supplying the service. The frequency of the cap was increased on August 4 from every six to every three months.

How is the price cap calculated? 

The cap is calculated by Ofgem based on the wholesale price of gas and electricity and also includes allowances for tax, charges paid to the energy networks, green levies and social payments.

What is happening to the price cap?

The price cap is going up significantly. The 80 per cent rise announced today – which comes into force from October 1 – will push the cap to £3,549 per year for the average household. This is the highest it has ever been.

Can my bills be higher than the price cap? 

Experts warn there is no cap on the maximum households pay – but the cap is actually a maximum cost per unit that firms can charge for gas and electricity. The actual cap for each home therefore varies according to use.

Ofgem said that from October 1 the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 52p per kWh for electricity customers and a standing charge of 46p per day. The equivalent per unit level for a typical gas customer is 15p per kWh with a standing charge of 28p per day.

Why is the price cap going up?

The price cap on energy bills is linked to the wholesale price of gas and electricity, which is itself based on what happens on European markets.

The wholesale price of gas has soared by around eightfold in the last year. That rise has been passed onto customers in increments – the price cap was already at a record £1,971 over the summer.

Gas prices were already increasing last summer as demand bounced as countries emerged from lockdown but the situation was made much worse when Russia invaded Ukraine and started to restrict gas exports to Europe. 

Gas prices are also decisive for electricity prices, because gas is so important for the generation of electricity. Over the last year, 42 per cent of the UK’s electricity came from burning gas.

Ofgem said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic, and had been driven still higher to record levels by Russia’s actions.

When will the price cap change again?

The price cap will be changed again in January 2023. It used to be changed twice a year, but changes announced on August 4 mean it will be reviewed every three months. It will change again in April, July and October 2023.

What is the price cap likely to be like next year?

Experts expect the cap to rise significantly in January 2023 and again in April, and then to fall back again in July and October next year – but the exact levels of the cap remains to be seen. 

Experts at Cornwall Insight expect the cap to hit £5,387 in January 2023, while those at consultancy Auxilione think it will hit £5,405. In April, Cornwall expects a £6,616 cap, while Auxilione believe it could reach £7,263.

There is then an expectation that the price will fall. Cornwall’s forecasts for the July and October 2023 caps are £5,897 and £5,887 respectively, while Auxilione expects it to reach £6,485 and £6,006.

What does the new price cap mean for monthly bills?

Experts at Uswitch estimate that monthly bills in October, November and December this year will hit between £243 and £513 a month, depending on the size of the home and usage, and based on the October price cap.

They say ‘low user groups’ are usually one or two people living in a one to two-bedroom flat, who are at home in the evenings and weekends and have a weekly laundry cycle. They also use the heating occasionally and don’t use a dishwasher or tumble dryer. These people are likely to spend around £243 a month on energy bills from October.

Then, ‘medium user groups’ are typically families of three or four people living in a three-bedroom house. Some members are home in the day as well as in the evening and weekends. The heating is used regularly, and electrical appliances are often turned on. Laundry is done three times a week. Their average energy bill is likely to be £363.

Finally, ‘high user groups’ tend to be large families with five or more living together in a four-bedroom house or larger. There is always someone at home in the day and and in the evenings and on weekends. 

There could be multiple television in use as well as a tumble dryer and dishwasher which are used regularly. Laundry is done daily. These groups are likely to face a bill of £513 a month from October.

What is the cap’s purpose?

When Theresa May’s government introduced the cap in January 2019, the aim was to protect households against profiteering energy giants. It would also, in theory, protect customers against sudden increases in bills.

More recently, Ofgem has allowed the cap to rise in a way that protects energy firms from going bust amid the soaring cost of wholesale gas and therefore electricity.

The effect is that bills are rising more sharply, and more often, to ensure suppliers can cover the spike in the wholesale prices of gas and electricity, which are around ten times higher than normal.

Who is affected by the price cap?

The new cap will come into effect for around 24million households in England, Scotland and Wales on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again. 

A few million people are on long-term fixed rates – which are not affected by the cap. However, many of these deals are expiring in the next few months.

What is the cheapest way of paying for energy? 

Paying by direct debit tends to be the cheapest way of paying for electricity and gas, because energy companies normally provide a discount for those using this method as it reduces their costs and administration time.

What about those on pre-payment meters?

The 4.5million pre-payment meter customers, who are often the most vulnerable and already in fuel poverty, will see an even more punishing increase, with their average annual bill set to go up to £3,608. 

What support is available for you?

It depends on your personal situation. All households have been promised a £400 discount on their energy bills. This support was announced in May, and will be paid in six monthly payments from October.

For direct debit customers this will be taken off their payments, while prepayment meter customers will be given discount vouchers from the first week of every month. These will be issued by text, email or by post.

Eight million of the most vulnerable households will also get extra support, taking the total they can get to £1,200.

These include a £650 one-off payment to households on means-tested benefits, a £300 payment to pensioners, and £150 for six million people who receive disability benefits.

Will the Government announce more support?

Charities, think tanks, opposition parties and potential future prime ministers have said the Government will need to do more for struggling households. But extra support will have to wait until the next prime minister is in place.

Consumer watchdog Which? has said the Government’s financial support for all households must increase from the current £400 to £1,000 – or from £67 to £167 per month from October to March.

However, no immediate extra help will be announced by Boris Johnson’s Government, with major financial decisions being postponed until either Liz Truss or Rishi Sunak is in No 10 after the Tory leadership contest.

The current Government has said that it is exploring the options and will present them to the new prime minister when he or she comes into office next month.

Miss Truss pledged ‘immediate support’ to help with soaring bills if she becomes prime minister, saying she would use an emergency budget next month to ‘ensure support is on its way to get through these tough times’. Miss Truss and her rival Mr Sunak have also both pledged to continue a £15billion support package unveiled in June.

The charity National Energy Action said the number of UK households in fuel poverty will have doubled in a year when the October cap rise takes effect. It calculates that 8.9million homes will be in fuel poverty from October – up from 4.5 million last October – and also takes into account the Government’s support package revealed in May.

Meanwhile, Mr Lewis has said the rise in the price cap means some people will pay up to £10,000 a year in bills. He told ITV’s Good Morning Britain the situation is a ‘genuine social and financial catastrophe that is putting lives at risk’. 

He went on: ‘I’m noticing many media organisations saying that the price cap is £3,549 a year – that isn’t correct. The price cap is actually a cap on the standing charges and unit rates that you pay, they have gone up by around 80 per cent.

‘The figure that’s quoted, the £3,549, is what the cap would be for someone who has typical usage – of course, most people don’t have typical usage, they’re more or less. 

‘That means there is no maximum amount that you can pay for gas or electricity.

‘You could easily be paying £5,000 or £10,000 a year if you have high usage. 

‘I worry terribly for some of those who have disabled children or disabilities themselves who need lots of electrical equipment to keep their houses warm because of medical conditions.’

He also said energy prices will be ‘unaffordable’ this winter.

Mr Lewis said: ‘The prediction now in January is up another 51 per cent on top of where we are now and that would take a typical bill and direct debit to £5,386 a year.

‘And that is not such a crystal ball prediction because we are seven months through the 10-month assessment period for the January price cap.

‘So if we look at the totality across the winter, from October until March, you are probably talking on typical use an average bill of over £4,400 a year, typical pro rata – it is totally unaffordable.’

He also said a movement to refuse to pay energy bills is ‘growing’, as he called on the next Prime Minister to spend billions to solve the crisis.

Mr Lewis told ITV’s Good Morning Britain: ‘I think the Don’t Pay movement is growing. There are dangers to being in the Don’t Pay movement as an individual.

‘All I can say is what would happen in a typical case scenario where an individual refused to pay – what is far more difficult to predict is if there is a massive movement not to pay.

‘I think what is safest for me to say is while I think it should have come earlier, my hope is on September 5 there will be a new Prime Minister. We’ve heard from both the candidates, but they seem to indicate they understand the scale of the crisis – what we need to hear is concrete solutions.

‘And let’s be absolutely plain: there are many methods that you can put in place to alleviate and mitigate some of the terrible damage that the rising energy prices are causing.

‘So I’m going to be agnostic over the solution, but it will involve spending substantial amounts, billions of pounds of Government money, to stop some of the most vulnerable and many middle income earners from having some terrible choices to make this winter. We have to hope that will be in place.

‘And I suspect if it isn’t in place, then people coming from the Don’t Pay movement are going to become a louder voice in this country.’

Prime Minister Boris Johnson said the Government will announce ‘extra cash’ in September to support households during the energy crisis.

Speaking on a visit to South West London Elective Orthopaedic Centre in Surrey, he said: ‘Of course, we could see this coming (energy bills rising) and that’s why we’ve put the steps in place that we already have.

‘And don’t forget that, although there will be more announcements next month, more cash coming from September onwards, you shouldn’t forget that the pipeline of cash stretches out throughout the autumn.

‘So, there’s going to be another £650 coming for every one of the eight million most vulnerable households in October.

‘In November, another £300 to help every pensioner, £150 extra for everybody who is entitled to disability benefits. On top of what we’re doing with Universal Credit and the living wage, lifting both of those up.’

He added: ‘There’s a pipeline of cash coming through over the next few months and through the autumn and the winter. But that is clearly now going to be augmented, increased, by extra cash that the Government is plainly going to be announcing in September.’

Mr Johnson also said he does not think the Government should ‘cap the whole thing’ for ‘the richest households in the country’.

He said: ‘We want to target the households so most of the money will go to the eight million most-vulnerable households, that’s the right thing to do. A lot of money will be going to absolutely everybody.

‘What don’t think we should be doing is trying to cap the whole thing for absolutely everybody, the richest households in the country. This will go on for a few months and it will go on over the winter.

‘And it will be tough – and I’d be very clear about that – but in the end, we are also putting in the measures we need to ensure that we have the energy independence to get through this.

‘And we are putting in more nuclear, and we are putting in more wind power. We have already seen a 26 per cent increase in British gas now from the North Sea.’

And Mr Johnson said that eventually energy bills will come down as Vladimir Putin’s ability to ‘exercise leverage over us and the rest of the world will diminish’.

The Prime Minister told broadcasters: ‘I think that we will do everything we can to help.

‘We want to make sure that we get people through the next few months, and we can, and we will because we took the right steps. We have a big, big package of help and support.

‘But the message I want to get over to people is that I’m afraid that there’s a global spike in energy costs driven by Putin’s aggression in Ukraine.

‘Putin’s position, Putin’s ability to blackmail, to exercise leverage over us and over the rest of the world will diminish week by week, month by month, and we will get through this and in the end, we will be in a much better position.

‘The other side will have more of our own UK energy to rely on, and the bills will eventually come down.

But Sir Keir Starmer has said it is ‘absolutely unforgivable’ that the Government is ‘missing in action’ during the cost-of-living crisis. The Labour Party leader asked Mr Johnson ‘where are you?’.

He told reporters: ‘I do think the Government has to take responsibility in a situation like this. 

‘But on the cost of living crisis you’ve got a Prime Minister who insisted on staying in office, recognises there’s a problem with energy prices, shrugs his shoulders and does nothing about it.

‘You’ve got two leadership candidates who are fighting with each other about how appalling they have been in government, but neither has come up with any plan to deal with this problem. Unforgivable.’

Sir Keir added: ‘My challenge for the Government is where are you? Join us in this challenge and do something about it because at the moment being missing in action is absolutely unforgivable.’

Sir Keir has also not ruled out Labour’s £30 billion plan to tackle the cost of living needing to be adjusted to a higher amount.

The Labour Party leader was asked if his plan to freeze energy prices, unveiled last week, could more than triple in cost to £100billion if utility bills keep soaring into next spring.

He said: ‘What we’ve got is a fully costed, comprehensive plan for this winter which will freeze those prices – that is welcome news to so many people who are worried sick today.’

But Sir Keir added: ‘I accept that in April, May next year we need to look forward then to the proposals in place.

‘That’s why I’ve said, alongside our plan, we need medium and long-term solutions. We need to be much more self-sufficient when it comes to energy.’

Sir Keir reiterated his call, made a year ago, for a ‘national mission to insulate homes’.

Miss Truss, the frontrunner in the Tory leadership contest, has insisted that she will ‘ensure people get the support needed’ in the coming months after the rise. 

A Truss campaign spokesman said: ‘Today’s announcement will cause grave concern to many people across the UK who will be worried about paying their bills.

‘As Prime Minister, Liz would ensure people get the support needed to get through these tough times. She will immediately take action to put more money back in people’s pockets by cutting taxes and suspending green energy tariffs.

‘This is on top of ongoing work such as the Energy Bills Support Scheme, which will see a £400 discount paid to consumers from October, and the £1,200 package of support for the most vulnerable.

‘Liz will work flat-out to deliver long term energy affordability and security, unleashing more energy by maximising our North Sea oil and gas production – helping keep bills down in the future.’

And former chancellor Mr Sunak called surging energy bills the ‘most pressing challenge’ facing the UK.

‘I’ve said that consistently, and as chancellor I announced significant support to help people. But the situation has deteriorated and as prime minister, I would go further.

Friends of the Earth have revealed how badly different areas in England and Wales will be affected by the October cap rise

‘My priority is to protect the most vulnerable in society, including pensioners, and I want them to have certainty that extra help is coming – that is what I would put in place.

Energy bills could double again to £7,300 by April, experts warn 

The energy price cap could top £7,000 next year, experts warned for the first time, as Ofgem announced the highest cap on record.

The energy regulator said that the price cap for the average household would increase by 80 per cent to £3,549 for the three months starting in October.

But experts at energy consultancy Auxilione warned that the cap could double even from that record high by April next year, hitting £7,263.

The price cap forecast by the consultancy Auxilione is shown

The prediction is based on the current cost of buying energy on global markets and also sees bills hitting £5,405 in January.

Fellow consultants at Cornwall Insight are a little more optimistic. Their model expects the cap to only reach £5,387 in January and then £6,616 from April.

Both consultancies then expect bills to fall by between £700 to £800 in July when compared to the April cap.

It is the grimmest forecast yet from the two outfits, whose predictions for October’s price cap were close to Ofgem’s decision.

Auxilione’s final forecast was just £27 above what the cap was set at, while Cornwall Insight’s prediction was £5 above.

The predictions are largely based on what gas prices are doing at the moment, so are subject to a lot of change between now and January, let alone before April.

‘While there is still some time until the January and April caps are set, the energy crisis is showing no sign of abating,’ said Dr Craig Lowrey, principal consultant at Cornwall Insight.

‘A key focus for the next Prime Minister and for Ofgem must be protecting consumers, and the wider economy from the impact of this rise,’ he added.

‘There are several avenues that can be explored including a review and expansion of the current support package of at least £400 per household.

‘However, all of these are temporary solutions and must be accompanied by a focus on implementing a viable long-term solution.’

He said that the purpose of the price cap is being undermined by the unprecedented rises in bills that are hitting households.

‘Throughout the energy crisis, the Government and Ofgem have remained committed to the cap, and in its ability to shield consumers from a volatile energy market.

‘However, the cap was never meant to be a permanent solution, it was created for a different energy market than the one we face today and has not protected consumers from what will be incredible hardship this winter.’

‘Alternative plans, which are doing different things – borrowing tens of billions for permanent, unfunded tax cuts – don’t actually do anything to help those most in need, risk making inflation worse and putting our nation’s finances at risk as well.’

He said his plan was the ‘right one’ for the country. Mr Sunak also said that protecting people from rising energy bills will be his ‘immediate priority’ as prime minister.

He said that people can judge him on his ‘track record’ as chancellor, pointing to the package of supports he announced for people to tackle the cost-of-living crisis.

‘It was acknowledged as being commensurate with the scale of the challenge, targeted at the people most in need,’ Mr Sunak told broadcasters.

‘That is my track record in grappling with this issue. I moved quickly as chancellor and this will be my immediate priority as prime minister and I’d like to try and do the same thing and make sure that we protect the most vulnerable as much as we can from this significant increase in bills.’

Ofgem’s Mr Brearley told BBC Radio 4’s Today programme he knew the increase in the cap would come as ‘devastating’ news for struggling households. He called on the Government and the next prime minister to take urgent action.

He said: ‘I know this will be devastating for many families, when they hear how much their energy bills are going to go up. We have done and looked at everything we can do as a regulator to address this figure. 

‘There’s a number of things we do to make sure that companies treat their vulnerable customers well. There’s a number of vulnerability schemes that we run. But the truth is this is beyond the capacity of the regulator and the industry to address. 

‘So what we are saying today is, look we have 10 days now until we have a new administration, have a new prime minister and a new ministerial team. What I am clear about is the prime minister with his or her ministerial team will need to act urgently and decisively to address this.’

Mr Brearley also said the Government would need to add to the support it announced in May when bills were only expected to jump to £2,800.

‘The Government support package is delivering help right now, but it’s clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year,’ he added.

‘We are working with ministers, consumer groups and industry on a set of options for the incoming prime minister that will require urgent action.

‘The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.’

He added: ‘The price of energy has reached record levels driven by an aggressive economic act by the Russian state. They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.’

Mr Brearley also said that the gas price this winter was 15 times more than the cost two years ago.

He told BBC Breakfast: ‘When I look at what… gas now costs this winter, it is 15 times the normal price that we were expected to pay two years ago.

‘Now if that were happening in petrol, it would cost us £400 to £500 just to fill up our car. So because those costs are changing, the price needs to change and that’s why the price cap is now changing to £3,549’.

When asked why Ofgem was not protecting the consumer by having a lower price cap, he said: ‘The reason we don’t have a lower price cap is because if the companies cannot recover the amount of money it costs for them to buy the energy, then ultimately, they will be unable to function.’

The price of petrol and energy bills has risen dramatically over the last year as inflation in the UK breaks through 13 per cent

‘They would have been unable to give us the energy that we need. So what the price cap does, and this is really important, it stops those companies charging excess profits over and above the cost of energy. 

What are your options for trying to cope with soaring energy bills? 

Many households are facing the stark reality of being unable to afford their energy bills this winter.

Consumers are currently hearing a lot about options for handling their bills, ranging from asking for help from their supplier to refusing to pay at all.

Here we look at the pros and cons of each, and where to turn for advice and help.

– The ‘Don’t Pay’ option

The ‘Don’t Pay’ group describes itself as ‘a grassroots movement demanding a fair price for energy for everyone’. More than 100,000 people have signed up to support a pledge to cancel their direct debits if the Government and energy firms ‘refuse to act’ by October 1.

However, refusing to pay has serious consequences and households are strongly advised against taking this option – no matter how difficult their financial situation might be.

If you are on a pre-payment meter, failing to pay will mean your supply being cut off.

If you are on a regular or smart meter and you do not reach an agreement with your supplier before cancelling your direct debit, the firm may try to force you to have a pre-payment meter installed. This means you will have to pay for your energy usage upfront and a weekly payment to cover any debts – which can be as high as 90% of energy top-ups and 100% of electricity top-ups.

Pre-payment customers also pay more than others. The current energy price cap is £1,971 for households with a standard meter, but £46 higher at £2,017 for those on a pre-payment meter.

Failure to reach an agreement with your supplier may also result in them applying for a court warrant so they can visit your home and disconnect your energy supply. This can be done remotely if you have a smart meter, but your energy company must visit you to identify and assess your situation.

An Ofgem spokeswoman said: ‘We know that people are under huge pressure, but we do not think it’s in consumers’ best interest to not pay their bills, and most leading charities and consumer groups agree.

‘The knock-on effects of not paying bills can be huge for people. They could lose their direct debit discounts or be forced to move to a pre-payment meter. It could also damage their credit rating.’

– Moving off direct debits to paying for what you use – or a ‘standing order’

As households’ monthly direct debits soar by hundreds of pounds, many are considering stopping them and paying for the energy they actually use in three-month chunks in the form of a standing order.

While this may give a sense of control, anyone paying on receipt of a three-monthly bill for actual usage will pay considerably more than direct debit customers as almost all providers add a discount for direct debit payments.

Gillian Cooper, head of energy policy for Citizens Advice, said: ‘Paying as you go can give you more control over the amount you pay, but you might pay more for that control. It’s unlikely that you would save money by moving to pay-as-you-go, because you can’t spread your costs over a year.’

– Direct debits remain the best option

Despite sickening increases, staying on a direct debit plan remains the most cost-effective option for paying for your energy.

However, customers have the right to challenge any increase that goes above the increased price cap – Ofgem is carefully monitoring this and has already warned firms that direct debits must be set correctly and they must ‘clearly communicate any changes in a way that helps consumers understand their payments’.

– I’m really struggling, where can I turn?

You should first contact your supplier and notify them that you want to pay off your debt through a payment plan. They should discuss your options with you and come to an agreement.

When coming to an agreement, your supplier should consider what you can afford to pay based on your income, outgoings, and any other debts you have. They will also consider how much energy you are likely to use in the future by looking at your past usage.

To ensure your energy bill is accurate, send your supplier readings from your gas and electricity meter.

It is very important to resist, if at all possible, being moved on to a pre-payment meter as this is the least cost-effective way of paying for energy.

Rocio Concha, Which? director of policy and advocacy, said: ‘We strongly encourage anyone concerned about being able to pay rising energy bills to speak to their supplier as energy firms have a duty to agree a payment plan that households can afford.

‘Depending on the supplier, customers can ask for a review of their payments, a reduction in or break from their payments, more time to pay or access to hardship funds.’

 

‘But what it can not do is set a price that is less than the cost of the energy that we buy, and that’s why we have to make the change that we are making today.’

Mr Brearley added that it was ‘devastating news’ for many families. He also said that ‘there are no easy answers’ to the energy crisis.

He told Good Morning Britain: ‘Genuinely, there are no easy answers, but there are some big decisions that ultimately ministers will need to make.’

He added: ‘To be honest I never imagined when I took this role that I would have to make an announcement that we made today.’

When asked about senior people in the energy industry receiving bonuses, he urged them to ‘be thoughtful’ about their pay and remuneration.

He said: ‘For example, the senior Ofgem team has given away any bonuses to charity because we recognise the situation that we are in right now.’

The boss of Ofgem also said the regulator has had countless meetings with the current Government, and called on the next prime minister to take decisions to ‘match the scale of the problem’.

‘This is a major issue for the country next year. This is a major set of decisions that the new government will need to make, that the new prime minister and his or her ministerial team will need to make,’ Mr Brearley said on a call with reporters.

He added: ‘It’s not for me to comment on the proposals that are out there for politicians. My point is very simple, it is going to need to be taken urgently and it’s going to need to be decisive.

‘And it’s going to need to match the scale of the problem that we see – which version of that that the Government chooses to pursue really is a matter for them.’

The Confederation of British Industry said the scale of Government help needs to be ‘urgently reviewed’.

‘Government must also step up and deliver a national energy efficiency programme that will help reduce household bills as soon as this winter,’ said Matthew Fell, the CBI’s chief policy director.

And the trade body for energy suppliers in the UK has said the charges its members will be forced to pass onto households will be ‘simply unaffordable’, after Ofgem hiked the cap.

‘This rise, while widely predicted, will be hugely worrying to customers. We know many customers are already struggling with energy bills and other costs and for millions of households, these latest increases will be simply unaffordable,’ Energy UK’s director of regulation Dan Alchin said.

‘The rise is driven by the cost of buying gas on the wholesale market, which has been at record levels for about a year now – with prices this week 10 times what they were before the crisis.

‘These costs are out of the control of energy retail suppliers who need to recoup them, otherwise we risk more going out of business in addition to the 30 that have done so since last August – causing huge cost and disruption to customers.

‘However bills of this size were unimaginable a few months ago and we cannot expect customers to bear the brunt.

‘Retail suppliers will continue to do all they can to offer help and support, especially to their most vulnerable customers, but faced with bill increases of this size and the numbers of customers who will need support, it won’t be enough.

‘The Government must step in urgently and put in place further support for this winter and with energy costs likely to remain high for the foreseeable future, look at ways to keep bills down next year as well – as we outlined in our letter to the Chancellor last week.’

Emma Pinchbeck, chief executive of Energy UK, said the new price cap will be ‘really scary’ for a lot of people and businesses across the country.

She told Sky News: ‘This is a crisis that has been caused by the international gas market and so we need to tackle that at a systemic level, as well as making sure that people have urgent help right now.’

She added: ‘We need something that is broad-brush that supports vulnerable people and really tackles what will be a massive cost-of-living crisis, but also something that helps middle income households and the wider economy.’

Addressing politicians, she said: ‘This is bigger than you think that it is. This is a whole-economy problem. This is urgent and we need to do more than you think that you need to do, and you need to do it now.’

Mr Zahawi said Ministers were working to develop more options to support households amid the price cap rise.

‘I know the energy price cap announcement this morning will cause stress and anxiety for many people, but help is coming with £400 off energy bills for all, the second instalment of a £650 payment for vulnerable households, and £300 for all pensioners,’ he said.

‘While Putin is driving up energy prices in revenge for our support of Ukraine’s brave struggle for freedom, I am working flat out to develop options for further support.

‘This will mean the incoming prime minister can hit the ground running and deliver support to those who need it most, as soon as possible.’

He also said the Government knows it has ‘got to do more’ to support households through the energy crisis. The Chancellor also indicated that the crisis would not be temporary, suggesting that it could last well into next year.

Free and easy trick to save more than £300 on your energy bill 

Millions of hard-up families could save hundreds of pounds on their energy bills this winter in a few simple steps without making their homes any colder, experts have said.

Record-breaking energy prices are likely to affect many over the next few months as Ofgem hiked its energy price cap today. Experts warn that worse is to come when the cap is updated in January.

But two small changes to the way your boiler works could save up to 18 per cent, or around £324, according to experts at the Heating Hub, which provides advice on energy efficiency.

– Turning down your flow temperature

The flow temperature on a boiler regulates how hot the water is when it leaves the boiler to go to your radiators. Most condensing combi boilers in the UK are still set to their factory setting, which tends to be around 80C, but at this temperature boilers cannot operate at their most efficient.

When a condensing boiler burns gas, a lot of the heat can escape out of the flue and out on to the street – this heat literally disappears into thin air. Steam coming out of a flue is a sign that flow temperature is high and heat is escaping.

At lower temperatures the boiler works to recycle a lot of this heat back into the water it is trying to warm up.

Jo Alsop of the Heating Hub said that by turning down the flow temperature, households could save around 6% to 8% of their annual gas usage. ‘It’s worth making the point that condensing boilers, even though they’re A-rated on the box (for efficiency), they don’t necessarily achieve A-rating in the home,’ she said.

Some A-rated boilers have been found to operate at E-rated efficiency levels in the home, at just 75 per cent.

Turning down the flow temperature is not the same as turning down the thermostat. The boiler and radiators will still work to keep rooms at the same temperature as before, but it might take a little longer for the house to heat up.

Ms Alsop said families should experiment with lowering the flow temperature. The colder it is, the more efficient the boiler will run. ‘We would advise to do that to around 60C and if they find that’s a bit too cool on a very cold day, they can always notch it back up, but importantly reduce it down again when the weather gets a bit warmer, and keep reducing it down,’ she said.

How to do this depends on the boiler, but it is a fairly simple process. It should say how in the boiler manual, which can often be found online. The Heating Hub also has a guide on its website on how to change the flow temperature.

It is important to remember only to do this if you have a condensing combi boiler which is not connected to a hot water cylinder. Also be careful about keeping rooms cold if you have vulnerable people in the home. Several energy suppliers are also keen for households to turn down flow temperatures.

Rebecca Dibb-Simkin, chief product officer at Octopus Energy, said: ‘Safely turning down the water flow temperature of your gas boiler is a little-known but very effective tip for saving gas whilst staying warm, and could save people up to 8% off their gas bills.

‘Over 100,000 of our customers who took part in our energy efficiency scheme last winter told us they tried it, with some of them knocking nearly £100 off their bills.’

– Turning off your boiler’s pre-heat function

The pre-heat function on a boiler is designed to ensure that hot water is ready to flow to the taps at a moment’s notice. It means the boiler always keeps a small amount of water hot.

It is a handy function when you want to wash your hands and do not want to wait for water to heat up, but the boiler is heating up water when you do not need it.

‘If the boiler is not on and heating the home, it will fire anyway, just to keep that water at temperature, even if someone is not home during the day, and certainly it will fire all through the night, even when hot water is not in demand,’ Ms Alsop said.

That means burning gas through the night, every night, for nothing. Turning off the pre-heat function might mean a longer wait for the shower to get warm in the morning, but it is a small inconvenience for the hundreds of pounds that can be saved.

Ms Alsop estimates households could save around 5 per cent to 10 per cent of their gas use. Guides on how to turn off the pre-heat function should be in the boiler manual or online.

However Ms Alsop said people should consider turning the pre-heat on during droughts if they have to wait an exceptionally long time for hot water to reach the taps. They can still turn it off during the day and night.

He said that help from the Government is coming but admitted: ‘We know that’s not enough. We’ve got to do more.’

‘We need to make sure that this isn’t a sticking plaster, that for the long term we continue to help the most vulnerable who have no cushion. And that’s what I’m determined to do.

‘And we’re working up those options for both households and for business for the incoming prime minister on the 5th of September to take those decisions.

‘So my message today is we’ll get this £37 billion to people to help them for now, and then more will be coming because we know this will continue in January and of course on to April and next year and we have to remain resilient.’

He also said that his aim is to make sure vulnerable UK households are ‘resilient through next year’.

The Chancellor declined to give specifics about what a package of funding might look like, but insisted that the Treasury was working on proposals to present to the next Prime Minister.

Mr Zahawi is not expected to retain his portfolio if frontrunner Miss Truss wins the contest to replace Boris Johnson.

‘We know we need to do more because actually the most vulnerable households have no cushion, have nothing available to them,’ he told broadcasters.

‘So what I’m looking at is how I can target that help for those people, not just to January, but we need to make sure that we’re resilient through next year.

‘More help is on its way because we know that the most vulnerable households need that additional help. And I’m doing the work to make sure that that will be in place throughout next year.’

In addition, the Chancellor denied that there was a lack of action from Government amid the Tory leadership contest. It was put to him by broadcasters that it was ‘intolerable’ to ‘leave people in the dark’ at the moment.

Mr Zahawi said: ‘That sounds like we’re not acting on this.’

Setting out the work of his team over the last month, he said: ‘We know (Vladimir) Putin has now worked out that actually this is quite a potent lever. You look at what’s happening in Germany and the rest of Europe.

‘We need to make sure there’s more support. My preference is for it to be targeted.

‘Why? Because it will give us a much longer, more leeway, to be able to face down Putin and send a very important message to him that this is not going to work.’

And the Chancellor suggested that the public does now need to look at how they use energy. Speaking to broadcasters, Mr Zahawi was asked if people should start reducing their energy use.

He said: ‘The reality is that we should all look at our energy consumption. It is a difficult time. There is war on our continent.

‘Very few people anticipated war. Wars happen in far-flung places. It is now here with us. We have to remain resilient. My responsibility is to deliver that help.’

On Wednesday, Mr Zahawi insisted ‘nothing is off the table’ when it comes energy bills, but added that a freeze in the price cap would not deliver ‘targeted help’ for those who need it most.

Labour shadow chancellor Rachel Reeves tweeted today: ‘This is incredibly worrying and will strike fear in the heart of many families. We cannot wait any longer to act.

‘This is a national emergency. The Tories must freeze energy bills now so households don’t pay a penny more in winter.’

She also said in a statement that the Government must choose between letting families suffer, or stop the oncoming rise.

‘Today’s announcement will strike fear in the heart of many families, and force many to make unthinkable choices this winter. The Tories now face an urgent choice.

‘They can carry on letting oil and gas companies make huge profits whilst every family suffers with bills rising this winter. Or they can act now and stop the energy price cap rising, by bringing in a windfall tax on those oil and gas profits.

‘People deserve a government that can meet the scale of this national emergency – not this spectacle of a Tory leadership race or a Prime Minister that put his out of office on months ago.

‘Labour is on your side, and our fully-funded plan to freeze the price cap will make sure households don’t pay a penny more this winter, saving you £1,000. 

‘Our mission for home grown renewable energy and to insulate 19 million homes will keep bills down for the long term too.’

Appearing on BBC Breakfast, Ms Reeves urged the Government to act to protect the public from soaring energy bills. She accused ministers of being nowhere to be seen on the morning of the announcement.

Rishi Sunak has also pledged measures to help with the cost of living, and will continue packages of support already introduced

Liz Truss has pledged to hold an emergency budget if she becomes PM to help with the cost of living

The Labour MP said people are ‘worried sick’ about what is happening and is ‘striking fear in the hearts of families right across the country’. She called on the Government to freeze energy fills and follow Labour’s own proposals.

What can people do to cut back on energy use? 

– First step: switch off and unplug

Households should by now have done a complete check of every power outlet, unplugging anything that is not necessary and turning devices off standby mode – and getting into the habit of doing this regularly.

Energy Saving Trust calculates that you can save around £55 a year just by remembering to turn your appliances off standby mode.

Almost all electrical appliances can be turned off at the plug without upsetting their programming. You may want to think about getting a standby saver or smart plug which allows you to turn all your appliances off standby in one go.

Check the instructions for any appliances you’re not sure about. Some satellite and digital TV recorders may need to be left plugged in so they can keep track of any programmes you want to record.

– Check your boiler

A recent report by the Heating and Hot Water Council found that households can save around 6% to 8% on their gas bill just by turning down the heating flow temperature on their condensing combi boiler.

Doing this will allow the boiler to run more efficiently and could save around £200 off an average energy bill.

Use the controls on the front of your boiler – not your room thermostat – to set the flow temperature for the boiler, which is the temperature your boiler heats the water to before sending it off to your radiators. The way you adjust the flow temperature and the display information available varies a great deal. There is a handy online guide at theheatinghub.co.uk.

Another easy saving is to turn off the pre-heat mode on the boiler, which could mean hot water taps taking longer to heat up, but could save hundreds of pounds a year.

– Forget about your tumble dryer and use other appliances wisely

Tumble dryers are massive energy drains, so on warm days hang clothes outside to dry instead and invest in a drying rack for cooler months.

Use your washing machine on a 30C cycle and reduce use by one run a week. Only run your dishwasher when it is full and use eco settings if possible.

Avoid overfilling the kettle – only boil the amount you need.

– Defrost your fridge and freezer

Remember to regularly defrost your fridge and freezer, as the more they ice up the more energy they will use.

A full freezer is more economical to run. With a full freezer, the cold air does not need to circulate as much, so less power is needed. If you have lots of free space, half-fill plastic bottles with water and use these to fill gaps.

BBC Good Food suggests you fill the freezer with everyday items you are bound to use, such as sliced bread, milk or frozen peas.

– Turn off lights

Turn lights off when you are not using them or when you leave a room.

Replacing all the lights in your home with LED bulbs could help you save even more.

– Keep windows closed when temperatures get hot

The obvious thing to do when homes warm up is to open all the windows. However all this does is fill the house with hot air.

It is best to use blinds and curtains to block direct sunlight during the day and then open the windows at night when temperatures drop, helping you to save energy by reducing the need for power-hungry fans.

– Use fans sparingly and wisely

Fans, even when used on cooling settings, will send bills soaring. You should not stop using them when necessary, but there are ways of maximising their effect and cutting the time they are switched on.

Putting fans at floor level helps to circulate the lower cold air rather than the warmer air that naturally rises in a room. You can also create the ideal combination for energy saving by pairing smart fan usage with closed windows, keeping the fans working during the day and the windows open at night.

– Invest in insulation

New analysis by the Energy and Climate Intelligence Unit has found homes rated band F on the Energy Performance Certificate (EPC) system, a measure of the home’s efficiency, are set to have a gas bill £968 higher than a home rated EPC band C, the Government’s target for 2035.

The average home in the UK is rated band D and these homes will pay £420 more for their gas this winter, compared with band C.

Energy Saving Trust also says that for those wishing to future-proof their homes, investing in professional draught-proofing and insulation in preparation for the winter months could lead to a reduction in bills by £405 for a semi-detached home. DIY draught-proofing is much cheaper and anything is better than nothing.

Installing solar panels for a similar property could lead to additional annual savings of around £450.

A quarter of heat in an uninsulated home is lost through the roof. Most homes have at least some loft insulation but often not enough. Topping up from 120mm to at least 270mm of insulation will help.

– And here are some myths…

Turning boilers off is not advisable or an effective way to save energy. Instead, thermostats and timers should be used effectively to regulate their operation.

Fridges and freezers are designed to be kept on all the time and energy will not be saved by turning them off for short periods because more energy will be used to cool them down again when turned back on. There are also important safety issues that can arise if food partially defrosts before it is prepared for eating.

 

She said: ‘The fact that no Government minister is available to come on your programme today is just appalling. They are not here to give assurances they are not here to set out what they are going to do. That is a dereliction of duty.’

Liberal Democrat leader Sir Ed Davey said that rise in the cap is ‘nothing short of a catastrophe’ for millions of households.

‘The only option is for energy prices to be frozen before these rises wreak havoc on our communities. Then we need a proper plan to be put in place to bring bills down next year,’ he said.

‘As millions suffer the Conservatives do nothing. No policy from the government, no plan from Liz Truss or Rishi Sunak. They have no idea how much pain these energy prices will cause our country. They are simply unfit to govern.’

Chairman of the Business, Energy and Industrial Strategy Committee, Darren Jones, also warned ‘many businesses will face bankruptcy because there is no price cap on their energy bills’.

‘The scale of the challenge will mean that the next chancellor will have to offer business grants and not just temporary tax and business rate cuts,’ the Labour MP said.

Scotland’s First Minister Nicola Sturgeon said the energy price cap rise is ‘simply unaffordable for millions’ and must be cancelled.

And Scotland’s Energy Secretary Michael Matheson said the increase is ‘unsustainable’ and warned it would push millions into fuel poverty.

Ms Sturgeon said the rise should not be allowed to happen. She tweeted: ‘This is simply unaffordable for millions. It cannot be allowed to go ahead.

‘This rise must be cancelled, with the UK gov and energy companies then agreeing a package to fund the cost of a freeze over a longer period, coupled with fundamental reform of the energy market.’

Mr Matheson told BBC Radio Scotland’s Good Morning Scotland programme households were already struggling with the cap increase in April this year, and that ‘increasing it by another 80 per cent is simply unsustainable.’

He said: ‘It will force quite literally millions of households into fuel poverty and extreme fuel poverty and is unsustainable.’

In a statement issued after the increase was confirmed today, Mr Matheson called on the UK Government to act.

He said: ‘Today’s price cap announcement and increase imposes a burden that customers simply cannot be expected to carry.

‘The only acceptable course of action now is for the UK Government, who have the necessary policy levers and borrowing powers at their disposal, to take immediate steps to cancel the increase for all households.’

Mr Matheson added: ‘No single government, company or organisation can solve this crisis alone. It requires a collective response commensurate to the situation.

‘We will continue to work with our partners, energy companies and stakeholders to do everything we can to help the people of Scotland through this deeply unsettling time.

‘We will also continue to press the UK Government to reform the energy market to prevent this situation occurring again in the future.’

Mr Matheson said the Scottish Government is treating the situation as a ‘public emergency’ and has prepared a £1.2 million package to enable the immediate expansion of energy advice services. 

Scottish Labour leader Anas Sarwar and Scottish Liberal Democrat leader Alex Cole-Hamilton called for energy prices to be frozen.

Mr Sarwar said: ‘This eye-watering price hike risks plunging millions of people into fuel poverty. This is a national emergency and our governments have a moral duty to act.’

Scottish Liberal Democrat leader Alex Cole-Hamilton MSP said: ‘This energy price rise will be devastating for hundreds of thousands of Scottish families and pensioners already struggling to make ends meet.’

ScottishPower chief executive Keith Anderson, said: ‘The size and scale of this issue is truly catastrophic for UK households and that’s why only a big solution can tackle it once and for all to shelter people from the worst this winter.

‘We have offered the Government a plan, backed by the industry, that can be delivered this year, tailored in line with their priorities and will support the UK economy – with the cap set at £3,549, what billpayers need now is to hear what additional help is coming.’

Richard Neudegg, director of regulation at Uswitch.com, said: ‘Here is the signal that the summer holidays are over. After seemingly endless predictions, the true magnitude of the October energy price cap is now clear. 

‘Ofgem has rubber-stamped the letters from suppliers that will now start landing on millions of doorsteps informing customers of exactly how much they’ll need to pay for their energy as we go into winter.

 ‘Households will face average monthly charges of £362 based on expected usage – almost three times more than the same period in 2021.

‘Even after the £66 monthly discount currently on the table from the Government, families will need to find on average an extra £169 per month compared to last year, when many household budgets are already maxed out.

‘The energy crisis we face this winter must never be allowed to happen again. This is a failure of the wholesale market and, until that is resolved, we won’t have a long-term solution.

‘The Government has made it clear that it will not intervene further until a new Prime Minister is confirmed. As concerning as this is, there does seem to be consensus that more support will be made available, but it remains to be seen if it will be enough.

‘Until the Government acts, which we expect will be in the coming weeks, consumers are being held in a cost-of-living limbo.’

The next prime minister will most likely be unable to avoid introducing a fresh package of support, a leading think tank has said.

Respected think tank the Institute for Fiscal Studies suggested on Friday that whoever becomes the next prime minister would be unable to avoid putting together a ‘substantial package of support’, no matter what is said on the campaign trail.

The new rise in the price cap, the IFS said, means the current Government supports will cover only 47 per cent of the rise in bills.

It said covering the same proportion of the energy price rise now would cost a further £14 billion.

 

The IFS said it was difficult to assess the impact of Ms Truss’s plans to cut green levies.

‘Cutting only those levies that still add to bills would be complex as they are linked to various schemes and subsidies and apply to business as well as households, but would save households around £50 on average over the three months from October,’ the think tank said.

Mr Sunak’s plan to cut VAT on household energy bills, the IFS said, would save a typical household £51 between October and December at a cost of £1.4 billion.

‘Looking beyond this winter, energy prices also look like they will remain very high well into next year, which will put pressure on the government to provide further support in the coming months,’ IFS economist Isaac Delestre said.

‘Whoever becomes the next prime minister will most likely be announcing a substantial package of support very soon after taking office.’

In Scotland, the £2million Social Housing Fuel Support Fund, administered by the Scottish Federation of Housing Associations, will open on Monday to provide help to the most vulnerable households.

Citizens Advice Scotland also said the increase should not be allowed to happen.

The charity’s chief executive, Derek Mitchell, said: ‘This increase should not go ahead. It is absolutely horrifying for people who are hanging on by a thread financially.’

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: ‘Today’s Ofgem price hike is like a dagger to the heart of millions of people up and down the country.

‘As a result of the decision, parents will be unable to feed their children, the sick and elderly will be condemned to worsening health, disabled people will go without vital medical equipment and households will be forced into poverty for the first time in generations.

‘All the solutions lie at the Westminster Government’s door, yet it is silent in the face of this looming disaster.’

And Andrew Forsey, national director of anti-hunger charity Feeding Britain, said: ‘Unless significant additional help is offered by the new prime minister, these eye-watering prices will spring a vicious hunger trap; leaving millions of families unable to afford heating or eating.

‘Eighty years after the Beveridge Report set the framework for a welfare state that could eliminate destitution from our shores, the threat of destitution now hangs over us again like the Sword of Damocles.’

Meanwhile Sara Ogilvie, policy director at Child Poverty Action Group, said: ‘Today’s energy cap announcement will terrify many low-income families. Their budgets have been overstretched for months, and soaring prices will make it practically impossible to escape the tightening grip of poverty.

‘We know that families with children spend 30 per cent more on energy bills than households without kids – yet Government has completely failed to recognise the extra costs facing households with children. 

‘The next prime minister will be on a collision course with reality unless they increase support to reflect the scale of need, and uprate benefits in line with inflation.’

And a charity which supports the vulnerable said families are facing one of the ‘bleakest Christmases’ for years.

Rossanna Trudgian, head of campaigns and public affairs at Action for Children, said: ‘Today’s announcement, and warnings of even worse rises to come next year, makes it clear that the country is facing a national emergency.

Can my bills be higher than the energy price cap? Will it get worse? How 80% rise will affect YOU – as it’s revealed a family of five in a four-bed home face monthly bills of £513 from October

The energy price cap, which regulates the amount that 24million UK households pay for gas and electricity, will jump by 80 per cent from October – sending the average household’s yearly bill from £1,971 to £3,549.

The cap affects those in England, Scotland and Wales on default energy tariffs, and the new level announced by regulator Ofgem this morning will remain in place until December 31, when it will be adjusted again.

Research by Uswitch found monthly bills in October, November and December this year will hit around £243 for low usage, £363 for medium usage and £513 for high usage – also depending on the size of the home. 

Experts at consultancy Auxilione used latest gas prices to predict the cap will rise by another 52 per cent to £5,405 in January 2023, then by a further 34 per cent to £7,263 in April – before falling, to £6,485 in July. 

So what is the price cap, what will happen to it in future and what help is available for households this winter?

Average monthly energy cost for October to December is calculated by Uswitch – for ‘low’, ‘medium’ or ‘high’ usage, based on Ofgem price cap for October. Average rental prices are from Hamptons data published this month. Mortgage figures from L&C Mortgages based on a repayment mortgage taken over 25 years at the average standard variable rate of 4.74 per cent

What is the energy price cap?

The energy price cap decides the maximum cost per unit that energy companies can charge for both gas and electricity. This is then used to calculate a typical annual bill.

The price cap was introduced in January 2019 as a way to ensure that households who do not have fixed deals – and who are, in some cases, less financially savvy – are not ripped off by their energy suppliers.

Twice a year, energy regulator Ofgem would set the maximum price that households on their supplier’s default tariff would have to pay for every unit of gas and electricity they used for the next six months.

It allowed for a small profit – capped at 1.9 per cent – that energy suppliers were permitted to take for supplying the service. The frequency of the cap was increased on August 4 from every six to every three months.

How is the price cap calculated? 

The cap is calculated by Ofgem based on the wholesale price of gas and electricity and also includes allowances for tax, charges paid to the energy networks, green levies and social payments.

What is happening to the price cap?

The price cap is going up significantly. The 80 per cent rise announced today – which comes into force from October 1 – will push the cap to £3,549 per year for the average household. This is the highest it has ever been.

Can my bills be higher than the price cap? 

Experts warn there is no cap on the maximum households pay – but the cap is actually a maximum cost per unit that firms can charge for gas and electricity. The actual cap for each home therefore varies according to use.

Ofgem said that from October 1 the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 52p per kWh for electricity customers and a standing charge of 46p per day. The equivalent per unit level for a typical gas customer is 15p per kWh with a standing charge of 28p per day.

An Ofgem graphic shows changes in the components making up the direct debit level of the cap, shown for dual fuel usage

Why is the price cap going up?

The price cap on energy bills is linked to the wholesale price of gas and electricity, which is itself based on what happens on European markets.

The wholesale price of gas has soared by around eightfold in the last year. That rise has been passed onto customers in increments – the price cap was already at a record £1,971 over the summer.

Gas prices were already increasing last summer as demand bounced as countries emerged from lockdown but the situation was made much worse when Russia invaded Ukraine and started to restrict gas exports to Europe. 

Gas prices are also decisive for electricity prices, because gas is so important for the generation of electricity. Over the last year, 42 per cent of the UK’s electricity came from burning gas.

Ofgem said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic, and had been driven still higher to record levels by Russia’s actions.

When will the price cap change again?

The price cap will be changed again in January 2023. It used to be changed twice a year, but changes announced on August 4 mean it will be reviewed every three months. It will change again in April, July and October 2023.

What is the price cap likely to be like next year?

Experts expect the cap to rise significantly in January 2023 and again in April, and then to fall back again in July and October next year – but the exact levels of the cap remains to be seen. 

Experts at Cornwall Insight expect the cap to hit £5,387 in January 2023, while those at consultancy Auxilione think it will hit £5,405. In April, Cornwall expects a £6,616 cap, while Auxilione believe it could reach £7,263.

There is then an expectation that the price will fall. Cornwall’s forecasts for the July and October 2023 caps are £5,897 and £5,887 respectively, while Auxilione expects it to reach £6,485 and £6,006.

What does the new price cap mean for monthly bills?

Experts at Uswitch estimate that monthly bills in October, November and December this year will hit between £243 and £513 a month, depending on the size of the home and usage, and based on the October price cap.

They say ‘low user groups’ are usually one or two people living in a one to two-bedroom flat, who are at home in the evenings and weekends and have a weekly laundry cycle. They also use the heating occasionally and don’t use a dishwasher or tumble dryer. These people are likely to spend around £243 a month on energy bills from October.

Then, ‘medium user groups’ are typically families of three or four people living in a three-bedroom house. Some members are home in the day as well as in the evening and weekends. The heating is used regularly, and electrical appliances are often turned on. Laundry is done three times a week. Their average energy bill is likely to be £363.

Finally, ‘high user groups’ tend to be large families with five or more living together in a four-bedroom house or larger. There is always someone at home in the day and and in the evenings and on weekends. 

There could be multiple television in use as well as a tumble dryer and dishwasher which are used regularly. Laundry is done daily. These groups are likely to face a bill of £513 a month from October.

What is the cap’s purpose?

When Theresa May’s government introduced the cap in January 2019, the aim was to protect households against profiteering energy giants. It would also, in theory, protect customers against sudden increases in bills.

More recently, Ofgem has allowed the cap to rise in a way that protects energy firms from going bust amid the soaring cost of wholesale gas and therefore electricity.

The effect is that bills are rising more sharply, and more often, to ensure suppliers can cover the spike in the wholesale prices of gas and electricity, which are around ten times higher than normal.

Who is affected by the price cap?

The new cap will come into effect for around 24million households in England, Scotland and Wales on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again. 

A few million people are on long-term fixed rates – which are not affected by the cap. However, many of these deals are expiring in the next few months.

What is the cheapest way of paying for energy? 

Paying by direct debit tends to be the cheapest way of paying for electricity and gas, because energy companies normally provide a discount for those using this method as it reduces their costs and administration time.

What about those on pre-payment meters?

The 4.5million pre-payment meter customers, who are often the most vulnerable and already in fuel poverty, will see an even more punishing increase, with their average annual bill set to go up to £3,608. 

The big five oil companies – Shell, BP, Chevron, Exxon and TotalEnergies – made record profits of nearly $60billion last year

What support is available for you?

It depends on your personal situation. All households have been promised a £400 discount on their energy bills. This support was announced in May, and will be paid in six monthly payments from October.

For direct debit customers this will be taken off their payments, while prepayment meter customers will be given discount vouchers from the first week of every month. These will be issued by text, email or by post.

Eight million of the most vulnerable households will also get extra support, taking the total they can get to £1,200.

These include a £650 one-off payment to households on means-tested benefits, a £300 payment to pensioners, and £150 for six million people who receive disability benefits.

Will the Government announce more support?

Charities, think tanks, opposition parties and potential future prime ministers have said the Government will need to do more for struggling households. But extra support will have to wait until the next prime minister is in place.

Consumer watchdog Which? has said the Government’s financial support for all households must increase from the current £400 to £1,000 – or from £67 to £167 per month from October to March.

However, no immediate extra help will be announced by Boris Johnson’s Government, with major financial decisions being postponed until either Liz Truss or Rishi Sunak is in No 10 after the Tory leadership contest.

The current Government has said that it is exploring the options and will present them to the new prime minister when he or she comes into office next month.

Check your boiler and don’t use tumble dryers: What can people do to reduce energy use amid soaring bills? 

– First step: switch off and unplug

Households should by now have done a complete check of every power outlet, unplugging anything that is not necessary and turning devices off standby mode – and getting into the habit of doing this regularly.

Energy Saving Trust calculates that you can save around £55 a year just by remembering to turn your appliances off standby mode.

Almost all electrical appliances can be turned off at the plug without upsetting their programming. You may want to think about getting a standby saver or smart plug which allows you to turn all your appliances off standby in one go.

Check the instructions for any appliances you’re not sure about. Some satellite and digital TV recorders may need to be left plugged in so they can keep track of any programmes you want to record.

– Check your boiler

A recent report by the Heating and Hot Water Council found that households can save around 6% to 8% on their gas bill just by turning down the heating flow temperature on their condensing combi boiler.

Doing this will allow the boiler to run more efficiently and could save around £200 off an average energy bill.

Use the controls on the front of your boiler – not your room thermostat – to set the flow temperature for the boiler, which is the temperature your boiler heats the water to before sending it off to your radiators. The way you adjust the flow temperature and the display information available varies a great deal. There is a handy online guide at theheatinghub.co.uk.

Another easy saving is to turn off the pre-heat mode on the boiler, which could mean hot water taps taking longer to heat up, but could save hundreds of pounds a year.

– Forget about your tumble dryer and use other appliances wisely

Tumble dryers are massive energy drains, so on warm days hang clothes outside to dry instead and invest in a drying rack for cooler months.

Use your washing machine on a 30C cycle and reduce use by one run a week. Only run your dishwasher when it is full and use eco settings if possible.

Avoid overfilling the kettle – only boil the amount you need.

– Defrost your fridge and freezer

Remember to regularly defrost your fridge and freezer, as the more they ice up the more energy they will use.

A full freezer is more economical to run. With a full freezer, the cold air does not need to circulate as much, so less power is needed. If you have lots of free space, half-fill plastic bottles with water and use these to fill gaps.

BBC Good Food suggests you fill the freezer with everyday items you are bound to use, such as sliced bread, milk or frozen peas.

– Turn off lights

Turn lights off when you are not using them or when you leave a room.

Replacing all the lights in your home with LED bulbs could help you save even more.

– Keep windows closed when temperatures get hot

The obvious thing to do when homes warm up is to open all the windows. However all this does is fill the house with hot air.

It is best to use blinds and curtains to block direct sunlight during the day and then open the windows at night when temperatures drop, helping you to save energy by reducing the need for power-hungry fans.

– Use fans sparingly and wisely

Fans, even when used on cooling settings, will send bills soaring. You should not stop using them when necessary, but there are ways of maximising their effect and cutting the time they are switched on.

Putting fans at floor level helps to circulate the lower cold air rather than the warmer air that naturally rises in a room. You can also create the ideal combination for energy saving by pairing smart fan usage with closed windows, keeping the fans working during the day and the windows open at night.

– Invest in insulation

New analysis by the Energy and Climate Intelligence Unit has found homes rated band F on the Energy Performance Certificate (EPC) system, a measure of the home’s efficiency, are set to have a gas bill £968 higher than a home rated EPC band C, the Government’s target for 2035.

The average home in the UK is rated band D and these homes will pay £420 more for their gas this winter, compared with band C.

Energy Saving Trust also says that for those wishing to future-proof their homes, investing in professional draught-proofing and insulation in preparation for the winter months could lead to a reduction in bills by £405 for a semi-detached home. DIY draught-proofing is much cheaper and anything is better than nothing.

Installing solar panels for a similar property could lead to additional annual savings of around £450.

A quarter of heat in an uninsulated home is lost through the roof. Most homes have at least some loft insulation but often not enough. Topping up from 120mm to at least 270mm of insulation will help.

– And here are some myths…

Turning boilers off is not advisable or an effective way to save energy. Instead, thermostats and timers should be used effectively to regulate their operation.

Fridges and freezers are designed to be kept on all the time and energy will not be saved by turning them off for short periods because more energy will be used to cool them down again when turned back on. There are also important safety issues that can arise if food partially defrosts before it is prepared for eating.

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