Households ‘face heat or eating dilemma’ when bills rise in April

Households will be left with deferring hundreds of pounds more on their April energy bills in a “seismic” blow to consumers, which experts have warned will force some to decide whether to eat or heat their homes.

Martin Lewis from Money saving expert has endorsed calls on the government to intervene to avoid a major crisis.

In the last six months, household consumers have largely been isolated from the drastic price increases in wholesale energy prices, as a legal ceiling on energy bills prevents companies from inflicting sudden increases on their customers.

However, the ceiling is adjusted twice a year – and the next correction, which should hit consumers from April, is expected to see a sharp increase to ease the pressure on energy companies.

Lewis said: “This year is going to be a very tough year for many people. The energy price crisis needs significant government intervention.

“We’re going to see an increase of at least 50 percent in energy prices in the system, and that’s unsustainable for many.”

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The revised energy price ceiling will be officially set in February, with the increase coming in on customers’ bills from April.

According to Cornwall Insights, an energy sector specialist, bills could rise from £ 1,277 a year below the current price cap to £ 1,865 a year when the next revision is announced, a 46 per cent increase.

They also predict that it could rise to £ 2,240 a year by the following quarterly revaluation in August 2022, unless there is a significant drop in energy prices globally.

Lewis said: “We need to look at what we can do now and how we can protect the people who have to choose between heating and eating. There are already some who have to make that choice. We have to look at the whole structure of the energy market.

“The government did not intervene early enough, so we are all paying for the market collapse we are seeing.”

Until now, energy companies have been left to subsidize the difference between sky-high wholesale energy prices and the cheap prices that are currently locked in for customers.

The burden that the companies have led to the collapse of 22 small businesses, who between them were responsible for more than two million homes.

While the customers of most of them were moved to alternative providers, a further 1.7 million have been left in limbo due to. partial collapse of Bulb, which is kept afloat by the government, at significant cost to taxpayers, as no other supplier is willing to accept its customers and a large additional cost.

The crisis has led to calls for the energy industry to be renationalised, while many in the industry say more needs to be done to prevent future companies from going bankrupt, with stricter rules put in place for who can run suppliers.

Lewis said there should be greater protection for the most vulnerable, who may not be able to shop around for the best deals or may be stuck on more expensive prepayment options.

“What’s coming in April is a seismic hit for the fuel bill, which will be astronomical,” he said. “The government has met the energy industry, but they have not met the consumer groups.

“I certainly have not heard that anyone has taken place. They have to fix it now, because if we leave this before it’s too late, it’s going to be a disaster.

The impending crisis has mobilized unlikely allies. While many on the left are calling for large-scale government intervention or the nationalization of industry, a group of climate-skeptical Tories have also pushed for action on the issue. On Sunday, 20 Conservative MPs signed a letter calls for VAT and green taxes on energy bills to be dropped to facilitate the framework for consumers.

Meanwhile, Labor’s shadow climate change and net-zero spokesman Ed Miliband said: “The government can not just stand and let families be hit by increases in bills of hundreds of pounds.

“Labor has already determined how the government will remove VAT from energy bills for six months, giving families a respite in the winter, and making it a national mission over the next decade to isolate homes to reduce energy bills.”

A government spokesman said: “Consumer protection is our top priority and therefore our energy price cap will remain in place.

“We are also further supporting vulnerable and low-income households through initiatives such as the £ 500 million Household Support Fund, Warm Home Rabat, Winter Fuel Payments and Cold Weather Payments. Domestic fuels such as gas and electricity are also already covered by the reduced 5% VAT rate. “

Additional reporting from the Press Association

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