Reports suggest Chancellor John Healey considering major targeted change in October budget
A BBC expert has said the Treasury has said the government is understood to be planning a major intervention on power bills which could impact customers of companies including Octopus Energy, British Gas, E.ON Next:, OVO Energy, EDF Energy and Scottish Power.
Prime Minister Andy Burnham has said rising energy bills are “difficult” for people after Ofgem raised its price cap by 4% to a three-year high and analysts forecast a further 9% hike from January. Ofgem said the price cap will rise by £60 per year – or £5 per month – to £1,723 for the average household using both electricity and gas if this level was sustained for a year.
In a further blow for households, analysts Cornwall Insight released their latest forecast on Wednesday for a further 9% increase to the price cap in the New Year. This would put an average January bill up to £1,872 a year, £149 higher than October’s £1,723.
Now it is understood the Treaury is considering changes in the October budget. On BBC Breakfast this morning Political correspondent Harry Farley said: “What we know is that the Treasury, the government are very concerned about energy bills. Why? Well, from next week, energy bill bills will go up by around 4%, so that would add around £60 to an average household using a typical amount of energy to their annual bills. But what’s really concerning people in government is the next rise that is expected to happen in January.
“And officials estimate that that could be much more a significant rise, potentially is 25% according to analysis by Bloomberg. So that would add hundreds of pounds a year to an average energy bill. So that’s what the government is really concerned about.
“They’re looking, we understand, at some form of targeted support. So not everyone would get it. Only the most deemed to be the most in need. We don’t know exactly what that support would look like. We know that various options are being considered, being looked at. I’m told there is a live discussion at moment in the Treasury. But any intervention in this area could be costly for John Healey, the chancellor, in what is already looking like it could be a tricky budget with the cost of government debt rising. And as I say, that budget in just over a month’s time will be a very significant moment in whether the government can add substance to its rhetoric of being the most transformative one in 40 years.”
Meanwhile energy firms have been warned they must “double down” on customer service ahead of a challenging winter for households. Citizens Advice – the official watchdog for energy consumers – said firms “must go further” to support households, despite finding a slow improvement in customer service over the last quarter.
Households are facing heightened winter pressure from energy bills after regulator Ofgem raised its price cap by 4% to a three-year high, taking effect from October 1 when bills will rise by £60 per year – or £5 per month – to £1,723 for the average household using both electricity and gas.
Analysts have forecast a further 9% hike from January. The charity’s latest ratings of firms, covering April to June, shows the median score rose slightly from 3.26 out of five in the first quarter to 3.4.
Average call wait times dropped from 77 to 68 seconds. Outfox Energy took the top spot with a score of 4.03, followed by 100Green (3.90) and E.ON Next (3.71) – which was the highest-ranking of the “big six” suppliers.
TruEnergy came in last with a score of 1.38, followed by Utilita at 2.53. A survey for the charity suggests more than 10 million households – or 37% of Britons – are worried about how they will afford their energy bills this winter.
The charity found 3.5 million households are in energy debt – either behind on their bills or without gas or electricity because they cannot afford to top up their prepayment meter.
Gillian Cooper, director of energy at Citizens Advice, said: “It’s positive to see higher levels of customer service in the energy sector, but companies can’t afford to be complacent. These latest ratings cover a quieter period for energy suppliers, when lower costs mean people are less likely to need support.
“As we face another difficult winter of rising prices, suppliers must ramp up their efforts. For people in debt, unable to afford a meter top-up, or worrying about whether they can afford to heat their homes, customer service isn’t just helpful – it can be a vital lifeline when the temperature drops.”
A Utilita spokesman said: “We welcome the data published in Citizens Advice’s latest star rating, which shows Utilita leading the sector for low call wait times and ranking among the best for correspondence and smart metering – all important benchmarks of good customer service.
“However, we have consistently warned that categorising affordability concerns as complaints is misleading.
“The Citizens Advice extra help unit primarily supports financially vulnerable people at risk of self-disconnection, so it is unsurprising that prepay customers are more likely to seek support. For a smart prepay specialist like Utilita, this inevitably skews our complaint score – the most heavily weighted measure – and, in turn, our overall ranking.”
