As feared, Ofgem has approved a sharp increase in the current price cap, from £1,971, for the average dual fuel tariff – an 80% increase. The move will deepen the UK’s cost of living crisis, with inflation already above 10%, and will increase pressure on the government to announce a new support package. Details and reactions follow… Updated 07.02 BST Important events BETA filters Key facts (9)Ofgem (11)UK (5)Liz Truss (4)Rishi Sunak (3)Jonathan Brearley (3) Jonathan Brearley also told Radio 4’s Today program that October’s price rise will be “devastating” for households and called for urgent and decisive action from the next PM: Jonathan Brearley, head of Ofgem, says the price rise will be “devastating” for families He warns that prices “look like they will continue to rise this winter” He says this is beyond the regulator’s ability to deal with – the next prime minister must act “urgently and decisively” — Steven Swinford (@Steven_Swinford) August 26, 2022 Ofgem boss Jonathan Brearley admits huge price cap hike ‘devastating’ for households “This is beyond the regulator’s ability to deal with – there are 10 days until we have new PM… the next prime minister will have to act urgently to deal with it” — Kate Ferguson (@kateferguson4) August 26, 2022
Ofgem: government must act to tackle rising prices
Ofgem is urging the next prime minister and cabinet to provide “an additional and urgent response” to the continued rise in energy prices. In an admission that the scale of the energy crisis is beyond the regulator’s powers, chief executive Jonathan Brearley says: “The government support package is helping at the moment, but it is clear that the new Prime Minister will need to act further to deal with the impact of the price rises coming in October and next year. We are working with ministers, consumer groups and industry on a range of options for the incoming Prime Minister that will require urgent action. The response should match the scale of the crisis before us. With the right support and with the regulator, government, industry and consumers working together, we can find a way to tackle this.” Ofgem acknowledges that rising energy prices will cause difficulties in the coming months: Chief executive Jonathan Brearley says he knows the “massive impact this price increase will have on households across Britain”. I speak to clients regularly and know that today’s news will be of great concern to many. Brearley blames Moscow for squeezing gas supplies in Europe, driving up wholesale prices: “The price of energy has reached record levels due to an aggressive economic act by the Russian state. They have slowly and deliberately shut off gas supplies to Europe causing damage to households, businesses and our wider economy. Ofgem has no choice but to reflect these cost increases in the price cap. As well as lifting the price cap by 80%, Ofgem has also today strengthened the rules on direct charges to ensure suppliers set them at the right level. This means customers only pay for what they need, the regulator says, adding: The changes will stop suppliers from building up excessive customer credit balances and using them in a risky way as working capital.
Ofgem: prices could get significantly worse by 2023
Ofgem also warns that buying gas in winter means “prices could worsen significantly by 2023”. He did not give a price cap forecast for January, when the cap will next change, “because the market remains very volatile.” Ofgem says the rise in energy bills reflects the continued rise in global wholesale gas prices, which began to rise as the world was unlocked from the Covid pandemic and were driven even higher to record levels by the slow shutdown of gas supplies in Europe from Russia.
Ofgem raises UK energy price cap to £3,549
Millions of households in Great Britain have faced a jump in their energy bills since October after the regulator increased the maximum suppliers can charge, meaning the average home is paying £3,549 a year. As feared, Ofgem has approved a sharp increase in the current price cap, from £1,971, for the average dual fuel tariff – an 80% increase. The move will deepen the UK’s cost of living crisis, with inflation already above 10%, and will increase pressure on the government to announce a new support package. Details and reactions follow… Updated 07.02 BST Aubrey Allegretti Liz Truss doubled down on her reluctance to “slap more money” on those who will struggle to afford spiraling energy costs this winter, while Rishi Sunak said millions could be forced into destitution without extra support as the pair clashed in the penultimate night of the Conservative leadership race last night. With energy regulator Ofgem expected to raise the price cap to £3,500 a year from October for the average dual-fuel tariff, Truss warned that the issue of spiraling fuel costs was not short-term. He told the audience in Norfolk: “If people think this problem will end in six months, they are wrong. This is a long-term problem.” But Sunak said her planned tax cuts would fail to help pensioners and those on lower incomes, adding that extra support for businesses struggling with energy bills was “obviously something the new prime minister will have to look at”. The Unite union accused energy companies of “rampant corporate profiteering”, adding to the cost of energy. Unite estimated that major energy suppliers, distributors and producers made a combined profit of £15.8bn last year. Unite general secretary Sharon Graham claims “rampant corporate profiteering is at the heart of skyrocketing energy bills”. Simon Cope, the Union’s national energy officer, said: “Ofgem is a regulator that does not regulate. It seems to just pass the energy giants’ profit package directly to the consumer. It is clear that piecemeal action will not solve the scale of these problems. Sooner or later the takeover of the energy giants into public ownership will have to be considered.” Almost half of Britons polled about the UK’s current energy crisis blame the government more than energy companies, according to a new poll. Research by Focaldata of 1,021 adults from across the UK found that 47% of respondents blame ministers for “failing to prepare and prevent” the huge rise in energy bills. Just under a third, 30%, condemn energy companies. The poll, on behalf of Cavendish Advocacy, found that 92% of people who took part were “concerned” about the energy crisis, with two-thirds “very concerned”. Tom Bradley, head of energy and green development at Cavendish Advocacy, said the situation would get worse once the price cap was announced. “The debate has progressed as to how the country has reached a tipping point where energy bills can exceed £3,500 a year. “Our poll shows that the public expects both politicians and the energy industry to take responsibility and bring more stability and affordability to the market. Surprisingly, almost a fifth of UK adults are willing to pay more if the money was invested in better infrastructure to avoid possible power outages or gas problems. “The cost of living is the key issue dominating our politics right now, and that’s because of rising energy prices. The public will be watching with great interest on Friday to see what politicians and industry do next to try to mitigate this energy crisis.”
Truss promises “immediate support” to fight the energy crisis if he becomes prime minister
British Foreign Secretary and Tory leadership candidate Liz Truss at the Conservative Party leadership election at the Holiday Inn Norwich North last night Photo: Tolga Akmen/EPA Liz Truss, the front-runner to succeed Boris Johnson as prime minister, has pledged “immediate support” to help the hardest-hit families with rising electricity bills if she becomes prime minister. Writing in the Dail Mail, Truss (who has previously favored tax cuts over ‘handouts’) says: “The impact on our cost of living is clear at the supermarket checkout, at the petrol pump and in our latest energy bills. “I know how difficult it is for millions of Britons and how serious the concerns are about the consequences of Ofgem’s decision today on the next energy price cap. “The rest of Europe faces the same challenge, which will be great as winter sets in. “If elected leader of the Conservative Party and prime minister, I will take decisive action to get into No 10 to provide immediate support, but I will also tackle the root causes of these issues so that we are never in this predicament again. “For those of you feeling the squeeze, my message is clear: I will ensure support is on the way and we will get through these difficult times.” My immediate priority will be to put more money back into people’s pockets by cutting taxes, such as reversing the rise in National Insurance. I would also suspend the green levy on energy bills, reducing average energy bills by £153. This will build on work already underway, such as the Energy Bill Support Scheme, which will see a £400 discount paid to consumers from October and the £1,200 support package for the most vulnerable. More here: Truss unveils plans to beat energy crisis: Favorite Tory leadership ‘will give multi-billion bailout to families hardest hit’ as price cap jumps to £3,500 a year from TODAY and reveals it will keep the emergency budget DAYS after No10 enters if he wins
Starmer: rising energy bills will be devastating for people and businesses
Labor leader…
