Key facts
- Energy bills in Great Britain will rise by over £220 annually under the new price cap.
- The energy price cap will increase to the equivalent of £1,862 per year for typical households.
- Fuel poverty campaigners estimate 13.5 million households will spend more than 10% of their income on energy.
- Nearly 5.5 million homes are projected to spend approximately 20% of their income on energy bills.
- Electricity rates will increase to 26.11p per kilowatt hour and gas charges to 7.33p for direct debit customers.
Millions of households in Great Britain are set to be pushed into fuel poverty following a significant increase in the energy price cap, effective from Wednesday. The cap on gas and electricity rates will rise to the equivalent of £1,862 per year for a typical household.
According to the End Fuel Poverty Coalition, this rise will increase the number of households spending more than 10% of their income on energy bills to 13.5 million, up from nearly 11.3 million in April. The charity's research, based on figures from the University of York, suggests that almost 5.5 million homes will face energy bills equivalent to about 20% of their income, a sharp increase from 4.3 million in April.
Simon Francis, coordinator of the End Fuel Poverty Coalition, stated that the figures highlight the unsustainable burden on households to heat and cool their homes. He warned that rising energy costs over the summer could eliminate any chance for households to reduce energy debts or build reserves before winter.
Energy prices are anticipated to remain elevated as the colder months approach. Under the new cap, electricity rates will increase from 24.67p to 26.11p per kilowatt hour, and gas charges will rise from 5.74p to 7.33p for households paying by direct debit. The energy regulator's previous methodology indicated an annual dual fuel bill of £1,862, but new calculations assuming lower consumption suggest an average annual spend of £1,663 from July.
Energy analysts at Cornwall Insight forecast that the average bill could be £1,654 from October, a slight decrease from the July figure. The surge in energy costs has intensified calls for government intervention. The union Unite is organizing protests demanding immediate cuts to energy costs and the renationalisation of energy companies. Sharon Graham, Unite's general secretary, criticized the cap increase as detrimental to struggling families.
Andy Burnham, a Labour MP, has outlined a vision for greater public control over essential services, including energy, to combat the cost of living crisis. Francis suggested that if Burnham becomes prime minister, new ministers should also reform how energy bills are set, advocating for a permanent social tariff, an end to energy debt, reduced electricity costs, and a plan to decouple gas and electricity prices.
Martin McCluskey, the minister for energy consumers, acknowledged families' concerns about rising energy bills, attributing them to global conflicts, and affirmed the government's commitment to addressing energy affordability. The government has already removed some policy costs from bills and expanded the warm home discount scheme to cover 6 million households. McCluskey added that the government would continue to monitor the situation and plan for winter contingencies, while pursuing clean power initiatives to lower bills permanently.