Vulnerable people will die and children will go hungry this winter unless the government commits to further emergency financial support, charity leaders have warned.
Ofgem confirmed a staggering 80 per cent rise in the energy price cap on Friday – sending the average household’s yearly bill from £1,971 to £3,549 from October.
Both Energy UK and Ofgem said Liz Truss or Rishi Sunak would have to “step in” and “act further” on support for struggling households once the Tory leadership contest concludes in early September.
Despite warnings that the cost of living crisis will become a “cost of lives” crisis, chancellor Nadhim Zahawi did not commit to further help – saying he could only “develop options” for the next PM.
Truss, who remains strong favourite to win the Tory contest, vowed on Friday to provide “immediate support” with energy bills – but did not yet commit to any extra direct payments.
Adam Scorer, chief executive of National Energy Action (NEA), said extra support was needed now. “It’s down to government to step in and prevent a cost of living crisis becoming a cost in lives crisis,” he told Sky News – warning that the poorest were “facing Armageddon over the winter”.
Money saving expert Martin Lewis also warned that people will die this winter as the energy price cap is set to soar 80 per cent in October.
“Let me be plain, ‘doom-mongering’ or not,” he tweeted. “More help is desperately needed for poorest or people will die this winter due to unaffordability of an 80 per cent so far energy price cap hike.”
The End Fuel Poverty Coalition – a group of 60 charities and unions – said the enormous price cap rise was like a “dagger to the hearts of millions of people up and down the country”.
Simon Francis, co-ordinator of the coalition, warned: “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.”
Demanding a commitment to extra emergency support now, he added: “All the solutions lie at the Westminster government’s door, yet it is silent in the face of this looming disaster.”
The NEA estimates 8.9 million will be in fuel poverty this October – a huge increase from 4.5 million last October.
The Institute for Fiscal Studies (IFS) said the announced price rise will add an extra £490 for a typical household’s energy bill over the period from October to December.
The think tank said the support package announced by then-chancellor Sunak in May will now only cover 47 per cent of the rise. It will cost a further £14bn to cover the same proportion of the increase in bills.
“Whoever becomes the next prime minister will most likely be announcing a substantial package of support very soon after taking office,” said Isaac Delestre, research economist at the IFS.
In a similar assessment, the Resolution Foundation think tank said the price cap rise meant winter energy bills are set to average around £500 a month for three months from October.
Torsten Bell, chief executive of the think tank, said boosting payments through the benefits system – as Sunak has promised – would have a “crucial role to play this winter”, but said even more radical approaches were needed.
The Resolution Foundation has suggested a solidarity tax” of 1 per cent and a new social tariff scheme which could reduce bills by 30 per cent.
Writing in the Daily Mail on Thursday, Truss promised “decisive action” to deliver “immediate support” on energy bills in an apparent change of tack.
But Truss then repeated her pledges to cut taxes, including by reversing the national insurance hike, and slash green levies on energy bills – without committing to any extra direct payments.
The Tory contest favourite argued it was not “right” to announce the full plan before the contest is over or she has seen all the analysis being prepared in Whitehall.
However, Truss and business secretary Kwasi Kwarteng – tipped to be her chancellor is she wins – have discussed new options such as suspending VAT from energy bills and using Universal Credit to boost support for vulnerable households, according to The Times.
Jonathan Brearley, chief executive of Ofgem, said the next prime minister “will need to act further” on support for households after announcing the 80 per cent price cap hike.
And Energy UK, the trade body for the energy suppliers, admitted that the charges its members will be forced to pass onto households will be “simply unaffordable” – urging the government to step in.
“Retail suppliers will continue to do all they can to offer help … but faced with bill increases of this size and the numbers of customers who will need support, it won’t be enough,” said Energy UK’s Dan Alchin. “The government must step in urgently and put in place further support for this winter.”
Labour’s shadow chancellor Rachel Reeves said the 80 per cent hike “will strike fear in the heart of many families, and force many to make unthinkable choices this winter”.
Calling for the price cap to be frozen this winter, Reeves added: “The Tories now face an urgent choice. They can carry on letting oil and gas companies make huge profits … Or they can act now and stop the energy price cap rising by bringing in a windfall tax on those oil and gas profits.”
Liberal Democrat leader Ed Davey said the Ofgem announcement “is nothing short of a catastrophe”.
Repeating his call for a price cap freeze, he added: “The only option is for energy prices to be frozen before these rises wreak havoc on our communities.”
Heidi Chow – executive director at Debt Justice, calling for an expanded windfall tax to provide new support – said the price rises “will push millions more households into energy debt and weigh them down for years to come”.
Citizens Advice’s head of policy Morgan Wild said the energy price cap rise would throw “millions of households” into debt – calling on the government to "act, and act decisively” to ease the pain of “an absolutely unthinkable rise”.
