𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Cash-strapped households face a miserable winter, with experts warning that energy costs will be sky-high as the cold weather hits. The impact of the Gulf war will continue to be felt for months to come despite a lull in the fighting between the US, Israel and Iran, leading to higher bills in the UK. And there were calls for incoming Prime Minister Andy Burnham, expected to be in Number 10 by the time winter comes, to provide help to people struggling to pay for heating.

Analysts Cornwall Insight have released their new forecasts for October, and they predict the price cap set by regulator Ofgem will fall by just 0.5%. It means the average household paying by direct debit would face an annual bill for gas and electricity of £1,849 per year.

Prices are already due to go up on July 1 – but experts say these will be cushioned by warmer weather and lower household energy use. However, the October cap will land as people switch their heating back on, meaning the continuing high cost of energy and will have a greater impact on household finances.

Incoming Prime Minister Andy Burnham could consider help for families struggling with bills such as scrapping VAT on househould energy, the experts said.

Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “October bills always hit harder than July’s because people are turning their heating on again, and this year that coincides with a difficult geopolitical backdrop. The new Prime Minister will face real pressure to act on support for vulnerable households, but the harder question is what comes after that, currently we are in a perpetual cycle of global shocks, high bills and short-term fixes.

“More permanent measures like social tariffs, moving levies into general taxation, or removing VAT on energy bills would take some of the pressure off bill-payers, but there is no firm steer that these options are being actively pursued by Government at the moment.”

From July 1, the average annual gas and electricity bill for a typical household paying by Direct Debit will rise from £1,641 to £1,862 under Ofgem’s latest price cap. This is equivalent to a rise of £221 a year or around £18.40 a month for a typical household.

Experts warned householders to take a meter reading.

Gareth Kloet, energy expert at Go.Compare, said: “Looking at appliance costs over a week or month gives a much clearer picture than focusing on a single hour of use. The extra cost of a single load of washing or one oven cycle may only be a few pence, but households use energy constantly and across lots of different appliances.

“That is why taking a meter reading on 30 June is so important. It helps make sure your supplier has an accurate record of the energy you used before the new, higher rates come in, rather than estimating your usage and potentially applying the wrong rate to part of your bill.”

Cornwall Insight says prices may fall by a small amount because of the US-Iran 60-day ceasefire, along with ongoing negotiations.

However, conflicting reports on the reopening of the Strait of Hormuz, a key shipping route in trhe region, the patchy progress of peace talks, and uncertain repair timelines to key regional infrastructure mean prices remain high.

Elevated wholesale prices seen in May and parts of June will already be locked in to the cap, which means bills are unlikely to fall to the levels seen in the first three months of the year. The scale of any increase will depend on how long the geopolitical uncertainty continues.

The government has several options available to support households during this time, and incoming Prime Minister Andy Burnham may be open to introducing targeted support for more vulnerable households if prices remain high.