Boris Johnson’s government has been urged to take action to tackle rising gas and electricity prices, amid growing concerns over the cost-of-living crisis faced by families across the UK.
Business secretary Kwasi Kwarteng is expected to hold “emergency” meetings with energy chiefs on Monday to address rapidly rising wholesale gas prices, which are set to have a knock-on impact on household bills.
Industry bosses are reportedly ready to ask for tax cuts and the relaxation of green levies in a bid to avoid further bankruptcies in the sector.
Ovo chief executive Stephen Fitzpatrick said the impact of soaring wholesale gas prices would be “an enormous crisis for 2022”.
“We’ve seen this energy crisis unfold now for the last three months, and we’ve watched as energy prices have spiked, fallen back, and spiked again,” he told the BBC. “We’ve had more than 30 bankruptcies in the sector, we’ve had millions of customers forced to change supplier.”
Mr Fitzpatrick added: “The cost to the consumer has already been more than £4bn. We haven’t seen any action from the government or from the regulator. There’s an acceptance that there’s a problem – but nowhere near enough urgency to find a solution.”
Fears of runaway fuel bills in 2022 have been mounting since rising gas prices began bankrupting suppliers in September. Since then, prices have risen from 54p per therm of gas to £4.50.
Household energy bills have been tipped by experts to jump to a record £2,000 a year, after the energy regulator authorised suppliers to increase bills by 12 per cent for a typical household on standard tariffs.
A further announcement on the energy price cap is due in February ahead of a second rise in April – with another hike expected to pay for the collapse of more than two dozen energy firms in recent months.
“We suggest that the tariff cap could jump by 56 per cent, reaching £2,000 [a year] for the summer 2022 period,” Martin Young, an analyst at the investment bank Investec, said shortly before Christmas.
Labour has urged Rishi Sunak to use a “windfall” of £3.1bn to help hard-pressed families, and has called on the chancellor to take action on reducing household energy bills.
New analysis by the party, based on figures from research carried out by the House of Commons library, projected that the government would receive £3.1bn extra in VAT receipts in 2021-22.
The sum would cover the estimated £2.4bn cost of removing VAT from fuel bills over the winter, said Labour.
“Right now, people are being hit by a cost-of-living crisis which has seen energy bills soar, food costs increase and the weekly budget stretched,” said shadow chancellor Rachel Reeves.
“That’s why Labour is calling on the government to immediately remove VAT on household heating bills over the winter months.”
A government spokesperson said: “We regularly engage with the energy industry and will continue to ensure that consumers are protected through the energy price cap, which is insulating millions from record global gas prices.”
