Ofgem has confirmed that energy bills will rise by £693 per year from the beginning of April from £1,278 to £1,971 for the average user - the true cost of the price hike will depend on whether you are a higher or lower energy user.
The energy regulator also confirmed that for customers with pre-payment meters the price cap will go up by £708 to £2,017.
The decision is likely to impact millions of households across the UK and applies to those who are on their energy supplier’s default tariff. Shortly after the announcement, financial guru Martin Lewis took to social media to share his views and respond to a raft of comments and questions from concerned consumers asking if they should switch supplier.
The founder of MoneySavingExpert.com (MSE) posted to his 1.2 million followers: “To everyone asking me should I stick on the price cap or fix now? My instinctive response is stick on it but that's what my team & I'll crunch numbers on today. So please give us time.”
He added that he and the MSE team would “publish the answer” on the official website and social media channels later on Thursday.
The consumer champion said that he will explain it on the Martin Lewis Money Show Live which airs at 8.30pm on STV/ITV tonight.
The 49-year-old will also be interviewing Chancellor Rishi Sunak for a segment on the show and putting questions to him about the cost of living crisis, including energy bills and the impact of interest rates.
In a statement to Parliament not long after Ofgem confirmed the 54 per cent increase, the Chancellor said the UK Government would take the sting out” of the price rises.
He promised that all 28 million households in Britain would get a £200 up-front rebate on their energy bills from October.
The UK Government will provide the cash for this, but it wants the money back so will hike bills by £40 per year over the next five years from 2023 to recoup its cash.
If all goes to plan, wholesale energy prices will drop so households can pay back what they owe, without a major rise in bills.
Some energy company insiders worry that while good in principle, the policy is too reliant on falls in global gas prices.
A total of £290 million of funding is expected to come to the Scottish Government from the UK Treasury to offset the huge rise in energy bills.
But as the Chancellor has no oversight of local government funding in Scotland a lump sum, based on the Barnett Formula, will be added to the Scottish Government block grant.
Mr Sunak confirmed that the funding going to Scotland would be £290 million and that the Treasury would be in talks with Scottish Finance Secretary Kate Forbes later on Thursday.
Mr Sunak said: "I very much hope that the Scottish Government chooses to do something very similar to what we are doing for the benefit of Scottish citizens."
It will then be left to the SNP Government in Edinburgh to decide how to use the funding.
In the statement to Parliament, the Chancellor said a total of £565 million of Barnett funding would go to the devolved governments to offer support for consumers in Scotland, Wales and Northern Ireland.
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