Millions of households across Great Britain have been pushed into fuel poverty following the latest rise in the energy price cap, which took effect from Wednesday. According to the Guardian, the cap on gas and electricity rates has increased to the equivalent of £1,862 a year, representing a surge of more than £220 annually for a typical household.
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How Many Households Are Affected?
The End Fuel Poverty Coalition has warned that the number of households spending more than 10% of their income on energy bills will rise to 13.5 million, up from almost 11.3 million in April. The coalition calculated these figures based on research by the University of York.
Even more starkly, the coalition said that almost 5.5 million homes would now face energy bills amounting to around 20% of their income, a sharp increase from the 4.3 million in the same position in April this year. The Guardian reports this as the steepest summer rise in energy charges in four years.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, said: "These figures show the reality behind the headline price cap figure: a growing number of households are spending an unsustainable share of their income just to heat their homes in winter and keep them cool in summer."
What Are the New Unit Rates?
Under the new cap, electricity rates have risen from 24.67p per kilowatt hour to 26.11p, while gas charges have increased from 5.74p to 7.33p, for households paying by direct debit, the Guardian reports.
The £1,862 annual figure is based on the energy regulator's previous methodology for a typical dual-fuel household. However, using updated calculations that assume lower energy consumption, the regulator now believes the average UK household will spend £1,663 a year from July.
What Happens to Bills This Winter?
Energy analysts at Cornwall Insight forecast that bills are likely to remain high as the cooler months begin. The consultancy predicted that from October, the average bill could be £1,654 under the regulator's new assumptions, representing only a 0.5% reduction from July. As gas usage typically increases with falling temperatures, the continued high cost is expected to have a proportionally greater impact on household finances in autumn and winter.
Simon Francis warned that any financial breathing room households may have hoped to find over the summer would now be eliminated. "With energy costs rising over the summer, any chance households had to reduce energy debts or build up reserves before the winter heating season will be wiped out," he said, according to the Guardian.
Calls for Government Action
The rise in energy costs has intensified pressure on the government to act on energy affordability. The trade union Unite has announced planned protests across the country, calling for what it describes as "an immediate and deep cut" to energy costs and a plan to renationalise energy companies.
Sharon Graham, Unite's general secretary, said: "The increase in the energy cap is another kick in the teeth for workers and families who were already struggling with ever rising bills and the cost of living crisis. The UK has among the highest energy bills in Europe, they should be going down not up."
Andy Burnham, the Labour MP widely expected to become the next prime minister, used a major public address on Monday to set out a long-term ambition for local leaders to have greater public control of essential services, including energy. Simon Francis responded by saying that any devolution of energy control "will count for nothing unless they are accompanied by a permanent social tariff, an end to energy debt, reduction of electricity costs and a credible plan to break the link between gas and electricity prices."
The Government's Position
Martin McCluskey, the minister for energy consumers, acknowledged public concern about rising bills. "We know families are deeply concerned about rising energy bills because of a war we did not choose, and we are determined to fight their corner to tackle energy affordability," he told the Guardian.
The government said it had removed some policy costs from home energy bills and expanded its warm home discount scheme to benefit 6 million households. McCluskey added that the government would continue to monitor the situation before winter "and plan for all contingencies, while doubling down on our mission for clean power to bring down bills for good."
Background: What Is Fuel Poverty?
Fuel poverty in Great Britain is generally defined as a household that needs to spend more than 10% of its income on energy to maintain an adequate standard of warmth and other energy services. The latest figures from the End Fuel Poverty Coalition suggest this threshold is now being crossed by more than 13 million homes, a significant increase driven by months of volatility on global gas markets, which the Guardian identifies as a key factor behind the latest price increase.
The scale of the increase underlines the extent to which wholesale energy market fluctuations continue to feed through directly into household bills, with relatively little insulation for lower-income households who spend a disproportionately high share of their income on energy.
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