The Government is under pressure to offer more support to households as soon as possible, following another forecast of huge hikes in energy bills this winter.
MoneySavingExpert founder Martin Lewis has urged the Government to deliver an action plan today, and for both Tory leadership contenders Rishi Sunak and Liz Truss to come together and agree on measures to alleviate the cost of living crisis.
He warned that current pledges from Truss, including tax cuts and green levies would not be sufficient, and that “lives depend” on more support being offered to vulnerable households.
Lewis said the expected increases in the price cap will be “unaffordable for millions” and “leave many people destitute.”
This included elderly people, with energy bills set to swallow 45 per cent of the new state pension.
His gloomy warnings and calls for support follow Cornwall Insight raising its predictions for the price cap to over £4,200 per year in January, peaking at £4,427 per year next April – with ultra-high bills expected through until 2024.
The price cap is already at a record high of £1,971 per year.
Such a rise in energy bills would effectively neuter the support pledged by former Chancellor Rishi Sunak in May earlier this year – where he offered £400 savings for households alongside up to £1,200 per year support for the most vulnerable energy users.
If Cornwall Insight’s forecasts prove to be correct, a gap in that support of £600 will open up in October and widen to over £1,000 in January.
Lewis was not alone in calling for help, as the Confederation of British Industry called on departing Prime Minister Boris Johnson to take immediate action to help people with soaring energy bills.
It warned that putting it off until after the Conservative leadership vote would be too late.
Tony Danker told BBC Radio 4’s Today programme that Johnson “needs to say something to the country to reassure people about what will happen” ahead of Ofgem’s announcement of “terrifying” price rises.
The watchdog is set to meet on the 26 August to establish the cap for October.
He argued that when the new prime minister is chosen on 5 September, they “need to tell us what will happen, not put it off for a couple of weeks while they do preparations for the emergency budget.”
Meanwhile, Nigel Pocklington, chief executive of renewables-only supplier Good Energy warned that the emergency was now on the scale of the 2008 financial crisis or the Covid-19 pandemic.
Alongside criticising Truss’ calls for scrapping green levies and lower taxes, he argued cuts to VAT would also be insufficient.
In his view, a clear plan needed to be established as soon as possible to “avoid the economic and social harm” that will come with rising bills.
He said: “If we don’t see significant action to help people and businesses before the winter then the cost-of-living crisis will be compounded further. And whoever is in number 10 come December will be wishing something had been done sooner.”