Government urged to help all households with energy bills as 16% hike forecast

The Government should make plans now to support all households with energy costs this winter due to the severity of forecast bill hikes, campaigners have said.

Household energy bills are forecast to see the biggest hike in four years as experts warned a typical bill could soar by nearly £300 in January due to the Iran war.

Experts at Cornwall Insight have predicted the average dual fuel energy bill will rise by 16% to £1,999 a year on January 1, up by £276 on the level between October and December and the biggest rise since January 2023.

Storage levels of EU gas are now at their lowest September level for 15 years, Cornwall Insight said.

Cornwall said the increase is driven by the escalating conflict in the Middle East, which has disrupted gas supplies to the UK and worldwide as the vital Strait of Hormuz shipping route has been effectively closed since the Iran war began in February.

The stark warning comes ahead of the October 1 rise in Ofgem’s energy price cap, which will see bills jump 4%.

The increase on Thursday will mean the energy bill for the average household in England, Scotland and Wales paying by direct debit for gas and electricity reaches £1,723, up £5 a month or £60 a year if this level was sustained over 12 months.

More than four million homes who remain on a standard energy tariff will be impacted, coming at a time when cooler temperatures will see many switching on their central heating.

The End Fuel Poverty Coalition urged ministers to prepare an “emergency heat tariff” to cap the cost of heating this winter, with gas prices already rising 27% year on year from Thursday.

Ofgem has set gas at a maximum 7.97p per kilowatt hour for households on the standard variable tariff from October 1.

The coalition has advised gas is capped at 10p per kilowatt hour as forecasters predict it could reach as high as 12p per hour this winter.

Simon Francis, co-ordinator of the coalition, said: “With the number of households in fuel poverty set to soar again and at the most dangerous time of the year, the Chancellor has no choice but to act to provide increased targeted support to vulnerable households and plan to deliver wider universal help for people facing a sixth winter of high energy prices.

“If ministers do nothing, millions will spend this winter in cold, damp homes, unable to cook a hot meal. People will get ill. Some will die.

“Every one of those avoidable cases will be on this Chancellor’s watch.”

TUC general secretary Paul Nowak said: “The Prime Minister has rightly recognised the need to give people breathing space with so many households under the cosh – but this energy bill emergency means the Government must go further and faster at the Budget to protect households.

“That means cutting energy bills for the majority of households with a social tariff, paid for by a tax on banks’ enormous profits.”

National Energy Action chief executive Adam Scorer urged the Government to do more to help poorer households with energy costs.

He said: “The autumn Budget must deliver additional targeted support for households most at risk this winter, alongside action to tackle energy debt and improve the least energy efficient homes.”

Craig Lowrey, principal consultant at Cornwall Insight, said: “These prices are going to hit households hard.

“January is already a difficult month for many, with cold weather and bank balances still recovering from Christmas, and now they face the biggest price cap rise we’ve seen in four years.

“At the moment, we can’t yet see an end to the volatility, and with gas stocks as low as they are, the effects of the conflict could be with us for many more months.”

He said the Budget on October 28 may offer some more support to under-pressure households, on top of the decision to remove VAT from household electricity bills, which also takes effect from Thursday.

“However, the Government is going to have to think carefully about the type and level of support that they make available,” he said.

The removal of the 5% levy until March 31 next year will save the average bill payer around £45 a year, estimates from the Government show.

Households will still pay 5% VAT for gas.