A consumer watchdog has warned that if the government doesn't increase the energy bill discount it could risk pushing millions of households into financial uncertainty.
Which? claimed that the government's financial package must increase from the current £400 to £1,000 - or from £67 to £167 per month - from October to March due to predictions that energy costs will soon skyrocket. It adds that the current financial support is not enough to protect living standards for households with the lowest incomes.
Initially, when the government introduced its financial package in May, the energy price cap was predicted to reach around £2,800 in October. However, analysts such as Cornwall Insight predict the average annual energy bill could shoot to £3,554 in October and further increase to £4,650 in January.
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Despite calls to increase the discount, Which? noted that even a 150 per cent increase would be insufficient to help families on the lowest incomes. It added that the government must also provide a one-payment of £150.
It also pointed out that additional support from the government is only a temporary solution until March when energy prices are predicted to soar to £5,341 and remain significantly high throughout 2023. Now, Which? is calling on the government and energy regulator Ofgem to undertake an immediate review of retail energy pricing, including the price cap.
Rocio Concha, Which? director of policy and advocacy, said: “With energy bill predictions continuing to spiral, the Government must increase the Energy Bills Support Scheme by at least 150%, or risk pushing millions of households into financial distress this winter. While increased support will provide relief for many, it is not a long-term solution.
"The Government and regulator must urgently undertake a wide-ranging review of retail energy pricing – including the price cap – to build a fair and affordable system for consumers. The Government must also develop a programme to urgently improve the insulation of homes – as this will help to reduce people’s energy costs for years to come.”
Labour spokesperson Pat McFadden said: “With each passing day and each new report, the huge scale of the energy price challenge facing households becomes clearer. People will struggle to pay for basic necessities and the Conservatives are scrambling around with no solution in sight.
“Labour has a fully-funded plan to make sure households don’t pay a penny more for their energy this winter, saving £1000 on energy bills.”
A Department for Business, Energy and Industrial Strategy spokesman said: “We know the pressures people are facing with rising costs, which is why we are taking direct action to help households with £37 billion worth of support.
“In addition to providing eight million of the most vulnerable households with £1,200 extra support this winter, we are also investing £6.6 billion in this parliament to improve energy efficiency as part of the Government’s ‘Help to Heat’ programme which is helping make households across the country cheaper to heat.”
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