Energy bosses warn of 'truly horrific' October price rise

Energy bosses warn of 'truly horrific' October price rise

Energy bosses warn ‘truly horrific’ October price rise could see some paying as much as £1 in £6 on bills – as they demand ‘massive’ package of support from Rishi Sunak including slashing green levies and VAT

  • The UK’s largest energy companies urge ministers to offer more help for Britons
  • They warn of a ‘truly horrific’ situation in October when bills are set to soar again
  •  MPs are told the worst-hit could pay as much as £1 in every £6 on their bills
  • Rishi Sunak is told to scrap green levies and reduce VAT on energy to zero 

Energy bosses today demanded Chancellor Rishi Sunak offer ‘unprecedented’ help for Britons as they warned of a ‘truly horrific’ situation in October when gas and electricity bills are set to soar again.

Households, who have already seen a huge rise in their bills this month, are braced for another massive hike in six months’ time due to the ongoing energy crisis.

Appearing before MPs today, the bosses of the UK’s largest energy companies urged the government to prepare for yet another shock increase by offering further support to hard-pressed Britons.

They detailed ‘a huge amount of anxiety’ among their customers, warned more than one-third of Britons could be pushed into fuel poverty, and said the worst-hit could end up paying as much as £1 in every £6 on their energy bills. 

MPs also heard how debt levels were already soaring, even ahead of October’s expected next increase.

The energy bosses called on Mr Sunak and the Treasury to extend existing help for households, but also to go further by scrapping green levies on energy bills, cutting VAT on gas and electricity and also to consider a deficit fund to remove £1,000 from the bills of the most vulnerable.

The bosses of the UK’s largest energy companies urged Chancellor Rishi Sunak to offer further help for hard-pressed Britons ahead of another expected hike in bills

Mr Sunak was told that his current package of support ‘isn’t nearly enough to mitigate the full impact of this price increase’

Households are braced for another massive hike in six months’ time due to the ongoing energy crisis

Due to massive pressure on suppliers and the impact of the Ukraine war, the UK’s energy price cap rose on 1 April by just under £700.

Some have estimated the price cap could rise by a similar amount again on 1 October, as there is little sign of the current crisis abating.

Speaking to the House of Commons’ Business, Energy and Industrial Strategy Committee, E.ON chief executive Michael Lewis described the 1 April rise as ‘unprecedented’.

Mr Sunak has so far offered Britons a one-off £200 discount on energy bills in October – to be paid back over five years from 2023 – as well as a council tax rebate and an extension of the warm homes discount, worth £150, to one million more households.

But Mr Lewis said the help ‘isn’t nearly enough to mitigate the full impact of this price increase’.

‘If nothing is done further by the government to mitigate this impact, we expect to see the outstanding debt increase by around 50 per cent on our books – that’s what our modelling shows us – by the end of this year,’ he told MPs.

He called on Mr Sunak to take much greater action ahead of October.

‘In the short-term the government needs to do more,’ he said.

‘Removing environmental levies and putting them into general taxation is one thing they can do right now.

‘Reducing VAT to zero and extending the warm home discount further – those are tangible things which can be done before the increase, again, in October.

‘And an extension of the existing £200 rebate. I think that would help very significantly all customers.

‘Bear in mind, we’re looking at up to 30-40 per cent of people going into fuel poverty when the price goes up again in October.

‘This is unprecedented, so it requires unprecedented action from government at this time.’

Simone Rossi, the chief executive of EDF energy, described how his company had recorded a 40 per cent increase in calls from customers concerned about their debt.

‘I think we’ve seen data showing 10 per cent of the most vulnerable customers will go from spending £1 in £12 on energy bills, to spending £1 in £6,’ he told the committee.

Chris O’Shea, the chief executive of British Gas owner Centrica, said about one in 10 of customers were currently late in paying their bills.

‘So 716,000 customers are on average about £440 in debt,’ he said.

‘That’s an increase of 125,000 versus this time last year and about £50million of extra debt.

‘In total, there’s about £315million in debt that’s outstanding.’

Mr O’Shea warned that those on pre-payment meters were set to be the worst hit by a further rise in bills later this year.

Keith Anderson, the boss of ScottishPower, told MPs he was ‘massively concerned’ about the impact of the energy crisis.

He described how his company had receieved 8,000 calls in a week to a new helpline from people concerned about their ability to pay.

Mr Anderson told MPs there was ‘a massive concern from people, a huge amount of anxiety from people on the phones about what they’re going to do and the concern they face’.

‘A real, real worry from them – a lot of people for the first time facing this issue and they’ve never been in this position before,’ he added.

He warned the situation for the most vulnerable and poorest – such as those on pre-payment meters – could get ‘truly horrific’ in October.  

‘It’s got to the stage now where I honestly believe the size and scale of this is beyond what I can deal with, beyond what I think this industry can deal with,’ he said.

‘And I think it needs a massive shift, a significant shift in the government policy and approach towards this.’

Mr Anderson urged the Chancellor to set up a deficit fund for anybody that’s deemed to be in fuel poverty or vulnerable.

This would take £1,000 off their bills and that debt put into a fund, to be repaid over the longer-term.

‘That fund can then be repaid over a 10-year period – you can spread that across the whole consumer base, or government can partially fund it,’ he said.

‘I think the problem has got to the size and scale that it requires something significant of that nature.

‘Where for those people who are deemed to be in fuel poverty or vulnerable need something of the size and scale that puts their bill back to where it used to be before the gas crisis.’

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