A protester outside Downing Street demands an end to surging cost of living. (Picture: Alisdare Hickson)
Annual energy bills are set to soar by up to £900 for households across Britain from April, plunging yet more millions into poverty. People will pay more even though the wholesale gas price is now below £1.30 a therm, half the price of mid-December and down from a peak of £5.95 last August.
The rise is happening because from the end of March the government will cut back on the subsidy it gives to energy firms to hold down bills.
On Monday, energy regulator Ofgem announced it was reducing the amount that suppliers can charge by around £1,000. Companies are now able to charge average users £3,280, down from the £4,279 the last time the cap was set.
But this doesn’t mean actual bills landing on people’s doorsteps are set to be reduced. This is because the government has set its own cap—called the Energy Price Guarantee (EPG)—on maximum costs of energy.
Despite whopping profits for the firms, tumbling wholesale costs, and Ofgem’s reduced cap, the Tories are actually set to raise the EPG.Both the Ofgem cap and the EPG relate to avenge unit energy prices—there is no limit on the actual maximum bill that a household can run up.
The government’s EPG cap now sits at £2,500—but is due to rise to £3,000 on 1 April. Therefore, the Tories are planning to pay the £280 difference between the EPG cap and the Ofgem one directly to companies.
To add to the basic £500 hit, the Tories are also ending the £400 discount scheme they were forced to grant some people last year when Rishi Sunak was chancellor. This is now coming to an end in April. The Citizens Advice charity estimates that the number of people who can’t afford their energy bills will double, from one in ten people to one in five. Chief executive Clare Moriarty called on the government to keep the EPG at £2,500.
James Taylor from disability equality charity Scope said, “We’re inundated with heart-breaking calls from disabled people who haven’t eaten for days, who can’t afford energy to charge wheelchairs and stairlifts but are still racking up huge energy debts.”
Whatever the uncertainties now, there’s no end in sight for people blighted by the daily decision between heating and eating. Ofgem chief executive Jonathan Brearley made mealy-mouthed noises that energy prices are set to fall again in the summer. But, he warned, “Prices are unlikely to fall back to the level we saw before the energy crisis.”
The government’s response to energy price rises is one driven by a desperation to protect the profits of companies—at the expense of ordinary people. It’s not an “energy crisis”—it is a crisis of greed, powered by the CEO’s of the fossil fuel companies and the government that props them up.
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