Sunak says households will have to adjust to higher energy prices
Rise of £693 a year, with £350 rebate offered by Chancellor
HIGH ENERGY prices could be here to stay, the Chancellor warned yesterday, as he said it would be “wrong” and “dishonest” to say that Britons will not have to adjust to rocketing costs.
Household bills are set to rise by almost £700 a year for millions, following an announcement yesterday that the price cap will be hiked by more than 50 per cent.
Regulator Ofgem said that the annual cap will now be set at £1,971, an increase of £693 on the previous maximum of £1,277.
For customers with prepayment meters the price cap will go up by £708 to £2,017, the regulator added.
The squeeze comes as oil giant Shell revealed a 14-fold increase in profits as the company benefited from the spike in global prices.
Ministers have intervened to try and soften the blow, offering households up to £350 off their bills this year, however people have been warned that high prices could be here to stay.
Chancellor Rishi Sunak has announced that the Government will “step in” to help households manage the “incredibly tough” costs.
To “take the sting out” of the rises, Richmond MP Mr Sunak said that households in Britain would get a £200 up-front rebate on their energy bills from October. The Government will provide the cash for this, but it wants the money back so will hike bills by £40 per year over the next five years from 2023 to recoup its cash.
If all goes to plan, wholesale
energy prices will drop so households can pay back what they owe, without a major rise in bills.
Mr Sunak also promised a £150 council tax rebate for homes in Bands A to D, something he said would cover around 80 per cent of homes in England.
However, he also warned he “doesn’t have a crystal ball” and told households they will have to adjust to higher energy prices in the future and “it is not sustainable to keep holding the price of energy artificially low”.
Mr Sunak told a Downing Street press conference last night there could be a further
price hike later in the year due to the “unpredictable” energy market. There’s global forces at play here that drive up gas prices at the moment. I don’t have a crystal ball. The energy markets are forecasting that prices go up further in October before falling quite
significantly next spring. But again, I don’t have a crystal ball and these things are uncertain.
“Higher energy prices are something we will have to adjust to, in common with other countries around the world and it would be wrong to pretend otherwise but what we can do is slow that adjustment to make it more manageable for people’s household budgets.”
He had earlier told the BBC: “We had a very difficult long winter last year which depleted gas stores, we’ve had disruptions to other sources of energy like nuclear and wind and we’re now seeing very rapid demand for gas in Asia. It would be wrong and dishonest for me to stand here and say to people that we don’t have to adjust to higher energy prices, we are unfortunately going to have to, but what Government can do is take the sting out of that adjustment to make sure the increase is smaller, initially spread over more years, and that’s what today’s £350 rebate does.”
Ofgem chief executive Jonathan Brearley said: “We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure
energy companies support their customers in any way they can. The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event.
“And Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.”
The Resolution Foundation think-tank said that even with the Government support, four million households will be pushed into fuel poverty – double the current amount.
I don’t have a crystal ball and these things are uncertain. Rishi Sunak warned there could be a further increase in energy bills later in the year.