Andy Burnham could slash up to £200 off energy bills when Britons can expect a surge in gas and fuel prices this winter due to the Iran war.
Ofgem’s energy price cap will rise by four per cent in October, due to an increase in wholesale gas prices as a result of the ongoing conflict in the Middle East, which has pushed up the cost of supplying energy in the UK.
This means the annual figure will rise from £1,663 to £1,723 – equivalent to around £5 more per month, or £60 per year, but analysts are already predicting a bigger hike to the price cap in the new year.
The prime minister, who has repeatedly claimed that he hopes to ease the cost of living, is reportedly exploring options to subsidise the millions of households living in fuel poverty, including those who do not currently qualify for existing support.
A support scheme called the Energy Price Protection Payment (EPPP) could be implemented in January, The Telegraph has reported, which would aim to mitigate the impact of the rising prices.
The paper reported that the EPPP would apply to recipients of the warm homes discount, as well as others deemed in need of support.
Claimants would have to receive benefits, according to the paper, but it remained unclear whether it would cover the estimated additional 2.5 million households classed as being in fuel poverty.
No final decision has reportedly been made on how much the EPPP support would be worth, or whether to proceed with it.
A government spokesperson did not deny the reports but emphasised the VAT cut on electricity bills already being implemented, which is expected to take around £45 off the Ofgem price cap from October, as well as the £150 removed from bills in April.
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They said: “The chancellor is fully focused on giving families and businesses breathing space and helping ease cost pressures.
“That’s why we have removed VAT from electricity bills and are reducing electricity costs by up to 25 per cent for more than 10,000 manufacturing businesses through our British industrial competitiveness scheme.”
The government has also expanded the £150 warm home discount to around six million households, extending the scheme for the rest of the decade.
Neil Kenward, Ofgem’s director general for markets, said: “High international gas prices are continuing to drive energy costs in the UK. We welcome the government’s intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter.
“Savings are available by choosing a fixed tariff, which are available at £100 or more below the October price cap, and many suppliers offer tariffs with cheaper electricity to smart meter customers for electricity consumed out of peak times.
“It’s also worth considering different payment methods, with prepayment customers paying the lowest price cap rates, and could save consumers an average of about £45 compared to direct debit.”