Confirmation that typical annual bills will rise from just under £2,000 to over £3,500, defined as spending 10% or more of disposable income on energy, means it will now apply to around half of households in England, Scotland and Wales. The poorest will be hit hardest, but the energy crisis, fueled by Vladimir Putin and quantified by Ofgem, is set to take the cost of living into new territory. Bills expected to rise after price cap announcement – live updates From October 1, when the first increased bills arrive, this will no longer be an issue only for the invisible and the poor, those people, parents and pensioners who are already familiar with longer hot bus routes and cafes that they are more tolerant of sharing heat at the price of a cup of tea. For millions of middle-income households in Middle Britain, energy stress will be a new and unavoidable reality. Even those who have done the right thing, re-delayed the pipes, installed a smart meter and boiled water by the cup, are unlikely to escape. By any measure the price increase is huge, the scale matched only by the speed with which it has choked household budgets. The new cap means prices have tripled in a year and are likely to multiply again to more than £4,000 in the new year. According to these projections, consumers could end up paying more for energy in the first quarter of 2023 than in all of 2021. Monthly energy payments of £300 or more are the equivalent of a new car or multiple percentage points of interest on your mortgage (which could be soon too). Holidays will be abandoned, sleepovers will be postponed, school trips will be canceled and wardrobes will be extended. For many, the trivial fruits of hard work will become luxuries or even out of reach. Use Chrome browser for more accessible video player 1:39 Energy price caps explained None of these sacrifices compare to the tricky choice between heating and food that thousands more households face, but deep social inequality is not the only thing the energy crisis has revealed. The scale of the crisis demands a response, but with government decision-making on hold until a new prime minister is confirmed next month, consumers are left in the dark, even if they can afford to turn on the lights. So far this year, the state response, led by former chancellor Rishi Sunak, has been ad hoc and reactive, struggling to catch up with events. An initial plan for a £200 loan plus council tax relief was turned into a £400 universal grant, an amount based on an Ofgem forecast of the autumn price cap, produced at the chancellor’s request, just as the Downing Street Partygate report by Sue Gray. which turned out to be £700 short. Ofgem’s intervention has been more effective as a political distraction than a guide to policy or prices, but that £400 may still buy the new prime minister time to develop a policy fit for the moment. Read more: The energy price cap is set to rise – here’s everything you need to know about your higher bills Parents turning to junk food to make up for not being able to afford holidays and days off Asda joins supermarket chain for eliminate “best before” dates on fresh produce cut waste
HOW ARE THE PRICE INCREASE AFFECTING YOU?
Let us know how the cost of living is impacting you. Share your story, photos or video with us using our app, private messages or email. :: Your report on Sky News apps :: WhatsApp :: E-MAIL By sending us your video/photos/audio you agree that we may transmit, publish and edit the material The energy industry favors freezing prices at current levels for two years at a cost of £100 billion, financed by government-backed loans, in an amount bill payers or taxpayers will repay over decades. There are other options, none of them cheap. VAT and green levies will likely be reduced, but will reduce bills by less than 10%, and any major intervention to defer the costly cost of wholesale gas will be in the tens of billions. A consumer bailout, either blanket or more targeted and therefore cheaper, is the only short-term option for ministers, but structural weaknesses in domestic and global energy systems will take many more winters to address. The UK may not be directly reliant on Russian gas, but it cannot escape rising costs in international markets driven in large part by the invasion of Ukraine. Use Chrome browser for more accessible video player 2:52 How to boost energy storage? With reduced supply from France’s aging fleet of nuclear reactors, Germany and others struggling to build inventories and competition for LNG supplies from around the world, strong prices are likely to remain high for months. This week more than half of Britain’s electricity was produced by natural gas, with renewables providing less than 15%. The need to accelerate the deployment of cheaper, mainstream renewables has never been clearer, despite perverse protests about green levies accounting for less than 10% of bills. The UK must also stop wasting the energy it has. The UK’s housing stock is a national disgrace, with seven million homes lacking basic attic insulation and eight million without cavity wall insulation. But despite millions of homes effectively burning money, there has been no call for consumers, businesses or public services to reduce demand. While European nations turn off the lights in public buildings and plan for a winter of rising prices and potential shortages, politicians and energy providers lack a clear plan and are nervous to even suggest a leap. Blood-chilling bills might make that choice at least easy this winter.
