RESCUE DEAL FOR COST OF LIVING ‘IN DAYS’
As energy bills set to rocket ANOTHER £800...
Billions of pounds of state support for families hit by the cost of living crisis will be announced in days.
With officials warning that energy bills are on course to hit almost £3,000, Boris Johnson and Rishi Sunak are working on a major intervention that could be unveiled as soon as tomorrow.
The move – initially planned for the summer – has been fast-tracked amid concerns the Government risks looking out of touch.
Senior Tories believe it could also help the Prime Minister ‘move on’ from the Partygate scandal, which is set to dominate headlines today when Whitehall ethics chief Sue Gray finally publishes her report into the affair.
It follows a warning from Ofgem yesterday that the energy price cap is on course to rise by another £800 to £2,800 in October.
Consumer groups said the prediction would strike ‘terror’ into the hearts of millions of householders. An MP said there was a real danger of people dying of cold at home.
Officials remained tight-lipped about the support package last night, with sources saying the details were not yet finalised.
But it could be funded in part by a windfall tax on the big energy producers.
It is expected to include a major increase in the Warm Home Discount Scheme. Worth £150 to three million low-income households, the payout could go up by £500. A planned increase
in benefits next year may be brought forward along with an offer to help the ‘squeezed middle’. Options include a government-funded direct discount on energy bills or a council tax rebate.
Ministers have also discussed a temporary VAT cut, although the Treasury is said to have reservations about the idea because it would not ease fuel or food costs.
Mr Sunak had planned to wait until July to unveil the package, when Ofgem will be able to give a more precise estimate of the likely rise in the price cap in October.
But, in a highly unusual move, the energy regulator’s boss yesterday revealed he was writing to the Chancellor immediately to say the cap is likely to rise to £2,800.
Jonathan Brearley told MPs that, without further support from the Chancellor, up to 12million households would be in fuel poverty. This is defined as needing to spend more than 10 per cent of disposable income on heat and light.
Former Cabinet minister Robert Jenrick predicted an ‘intervention of some significance’ within a fortnight. He told LBC Radio: ‘There’s reason for the Chancellor to act swiftly. He’s now armed with a guide from Ofgem as to where they’re likely to end up at the end of the summer. There’s reason
‘People will die of hypothermia in homes’
to instil some confidence by setting out a clear plan now.’
Torsten Bell of the Resolution Foundation, an independent think tank, said Ofgem’s decision to write to Mr Sunak ‘means one thing – a Government announcement on extra help is coming in days’.
Mr Bell said it would have to be worth well over £10billion to meet the challenges faced by struggling families. A Government source said it was ‘possible’ the package could be unveiled tomorrow. But if the details are not ironed out in time it is likely to be delayed until early next month when Parliament returns from a week’s recess.
Adam Scorer of National Energy Action, a fuel poverty charity, said: ‘Ofgem’s warning that the price cap will rise again by over £800 will strike terror into the hearts of millions of people, already unable to heat and power their homes.
‘It will plunge households into deep, deep crisis. The financial, social and health impacts are unthinkable.’
Age Scotland’s chief executive Brian Sloan said: ‘This projected increase is jaw-dropping and would be nothing short of catastrophic for older people.’
Citizens Advice Scotland chief executive Derek Mitchell added: ‘An increase in energy bills of this size and scale without significant support from the Government would be absolutely catastrophic for people across the UK, especially for those on low and insecure incomes.’
MPs on the Commons business committee yesterday heard evidence of damning failures by Ofgem to regulate the energy market, leaving taxpayers on the hook.
Andy McDonald, Labour MP for Middlesbrough, described higher bills as a threat to life, saying: ‘The reality of that is going to mean – in constituencies like mine – people will die of hypothermia this winter in their own homes. Thus far, I don’t think I have heard anything that is up to the urgency or scale of the situation.’
Scottish Labour leader Anas Sarwar said: ‘This news will be a hammer-blow to the finances of thousands of Scottish families. This is now the biggest domestic emergency in a generation and yet neither of our governments are lifting a finger.
‘Scottish Labour has been clear on this for months now – we need a windfall tax on the profits of oil and gas giants.’
Scottish Energy Secretary Michael Matheson said: ‘The UK Government cannot stand by. They must take bold, radical action before people are forced into poverty and hardship.’