A 4% hike to Ofgem’s energy price cap takes effect today, with warnings that household bills could soar by almost another £300 from January.
Campaigners have urged the Government to make plans now to support all households with energy costs this winter because of the severity of forecast bill hikes.
As of today, the price cap will increase by 4%, making the bill for the average household in England, Scotland and Wales paying by direct debit for gas and electricity reach £1,723, up £5 a month.
Experts at Cornwall Insight predict that it will rise by a further 16% to £1,999 a year on January 1, up by £276 on the level between October and December and the biggest rise since January 2023.
More than four million homes that remain on a standard energy tariff are affected by the increase.
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The latest increase in the price cap has been driven by the escalating conflict in the Middle East.
Gas supplies to the UK and worldwide have been affected as the vital Strait of Hormuz shipping route has been effectively closed since the Iran war began in February.
In an effort to help households, the Government has temporarily removed the 5% VAT from electricity bills until March 31 next year to cut around £45 a year. Households will still pay 5% VAT for gas.
Prime Minister Andy Burnham said: ‘For many families, the energy bill is the one they dread the most. I don’t accept that it has to be this way, and I am determined to bring down costs for good.
‘But I know people can’t wait. Families need breathing space now. That’s why, from today, VAT is gone from your electricity bill. And we’re going further, capping bus fares at £2 from January and cutting business rates for pubs, social clubs and live music venues.’
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