Energy chiefs have warned of a “truly horrific” spike in bills in the autumn that could leave up to 40 per cent of households in Britain in fuel poverty unless the government offers further help.
Keith Anderson, chief executive of ScottishPower, told MPs that people were going to “really, really struggle” in the autumn with the weather turning cold and the household energy cap expected to rise again.
Anderson told the House of Commons’ energy select committee that ScottishPower had received 8,000 calls last week alone from people expressing worries about their ability to pay their energy bills.
He said customers were expressing “a huge amount of anxiety”, adding: “There are a lot of people for the first time facing this issue; they’ve never been in this position before.”
Michael Lewis, chief executive of Eon, warned the committee that a large proportion of Britain’s 27mn households were likely to end up in fuel poverty from October without further government intervention.
“We are looking at up to 30 or 40 per cent of people going into fuel poverty when the price goes up again in October,” he said, adding that the situation required “unprecedented action from the government”.
Meanwhile, Hayden Wood, chief executive of Bulb Energy, told MPs he was still being paid the same £250,000 salary he was receiving before the company collapsed in November and was rescued in the biggest state bailout since Royal Bank of Scotland more than a decade ago.
Bulb was the biggest supplier out of the 29 companies that failed as a result of the sharp rise in energy prices since the middle of last year. Wood, who founded the company, said he was no longer an “active director” although administrators have asked him to continue temporarily as chief executive. The Bulb bailout is expected to cost the taxpayer more than £2bn.
At the start of the month, energy bills for the 22mn British households not on fixed-term deals rose 54 per cent as regulator Ofgem increased the price cap to just under £2,000 a year on average.
Analysts have warned of a further jump in the price cap in October by as much as £600, depending on movements in wholesale energy prices in the coming months.
In an attempt to help, chancellor Rishi Sunak in February announced a £150 rebate on council tax bills for those in property bands A to D from April and a £200 loan to households in October. But Lewis said Sunak’s intervention in February was “not nearly enough” to mitigate the impact.
Anderson said he expected most families to cope during the summer when consumption usually falls because of warmer weather but warned: “Come October, that’s going to get horrific, truly horrific.”
He called for a “deficit fund” under which the government would knock £1,000 off the bills of anyone considered “vulnerable” or in “fuel poverty”, with the money repaid over 10 years.
Lewis said he backed the proposal but also called for short-term measures, such as cutting VAT on bills.
Chris O’Shea, chief executive of Centrica, owner of British Gas, said the situation would get “much worse” from October without further intervention. The number of Centrica customers late with payments had risen by 125,000 to 716,000 over the past year.
Simone Rossi, chief executive of EDF, said his most vulnerable customers would see the proportion of their income spent on energy rising from £1 in £12 to £1 in £6 later this year.
There is no single definition for fuel poverty across Britain, but it is generally classed as households that must spend a high proportion of their income to keep their home at a reasonable temperature. Latest estimates suggest it affects about 13 per cent of households in England, 25 per cent in Scotland and 12 per cent in Wales.
The Treasury said the chancellor had promised to review the situation before October and would decide on an “appropriate course of action at that time”.
Additional reporting by Leke Oso Alabi
Source: Economy - ft.com
