£1,500-a-year cost of living crisis as energy bills soar

‘Squeeze on spending’

A COST of living crisis will see average households’ bills soar by more than £1,500 a year, experts warn today.

Families are now on the cusp of the biggest spending squeeze in nearly a decade as bills and prices rise relentlessly.

Money experts said a ‘perfect storm’ of price and tax hikes could push family finances to the limit across the country.

Energy prices have rocketed this week, leading to suppliers pulling deals and predictions that average households could soon face paying over £400 extra a year on power bills.

A year ago, the best one-year fixed deal on comparison website Energy Helpline was £855 – but last night the cheapest available was more than double that at £1,895.

Petrol prices have also blown up, with the cost of filling a 50-litre tank rising from £56.55 to £67.30 since August last year.

The price of food and drink in shops and supermarkets rose by 1.1 per cent in August – the highest rate since 2008 – as retailers battled supply shortages and higher costs.

Train fares, telephone and internet bills, and other day-to-day expenses are also increasing. While Boris Johnson’s health and social care levy means workers will have to pay an extra 1.25 percentage point in tax from next year.

There are also fears of hefty council tax hikes – and there could be more bad news in Chancellor Rishi Sunak’s Budget next month.

And insurance experts warned that premiums will rise in January when firms are banned from reserving their best deals for new customers.

Inflation jumped from 2 per cent in July to 3.2 per cent last month in the biggest spike since 1997.

The figures, compiled for the Daily Mail by Hargreaves Lansdown, show it could all add up to cost average families an extra £132 a month – or £1,584 a year – in what will be the biggest rise in household spending costs since 2012.

Sarah Coles, a personal finance analyst at the investment company, said: ‘This is a squeeze on spending at a time when many people’s financial resilience has taken a beating as a result of the pandemic.’

Energy firms have this week pulled nearly all fixed deals from sale on price comparison sites as wholesale gas prices hit record highs. And some believe the power price surge means some suppliers will not survive the winter. Jane Lucy, of auto-switching site Labrador, said: ‘It is not unrealistic to think that at least half a dozen firms could collapse this winter.’

Energy regulator Ofgem’s price cap protects around 15million households on standard variable tariffs. The cap has already risen by £139 to stop average standard variable tariff bills going above £1,277 – but experts said the wholesale price rises mean the cap may have to be raised a further £280 in the new year.

Myron Jobson, personal finance campaigner at Interactive Investor, says: ‘Consumers face a bleak reality of higher utility bills in the winter months. It will cost more to power the washing machine and even take a hot shower this winter.’

Laura Suter, of investment firm AJ Bell, said: ‘These increases will have a big impact on many families who were just about managing before.’

The unbridled arrogance of Insulate Britain, the eco-zealots who have wreaked havoc all week along the M25, really knows no bounds.

Their stunts, aided and abetted by often supine police forces, haven’t just inconvenienced thousands of drivers. They’ve endangered lives, too.

On Wednesday, one woman was airlifted to hospital after their puerile antics were blamed for a multi-car pile-up.

But what really sticks in the craw is how misplaced the spray-on anger of these ludicrous cranks is.

Successive British governments have fallen over themselves to pursue an aggressive anti-carbon agenda, despite our own CO2 emissions being a paltry 0.9 per cent of the world total. Their commitment to fighting climate change is all very virtuous but, as we see today, the cost is beginning to bite the consumer hard.

This winter, households face paying up to twice as much for their energy, thanks partly to savage cuts to our nuclear and fossil fuel industries.

The truth is, the transition to green energies such as wind and solar will need substantial back-up from traditional sources for the foreseeable future.

And unless we produce it ourselves with carbon and nuclear, it will mean importing high-priced energy from abroad to stop the lights going out.

The proof? earlier this month a large coal power plant due for decommissioning had to be fired up because low winds had led to a shortage of renewable energy.

Meanwhile, farcically, Britain is ‘greenwashed’ by outsourcing our manufacturing abroad, frequently to China where emissions are off the charts but, of course, the M25 mob fear to tread.

Across the UK, families already struggling with rising food and petrol prices – not to mention impending hefty hikes in National Insurance and council tax – are in for a harsh, expensive winter.

All of this should set alarm bells ringing for the Prime Minister. Touting Britain’s green credentials is easy. But he will need all his energies to sell the consequences to a shivering, impoverished nation.