Labour urges Boris Johnson to tackle rising gas bills

UK politics & policy updates

The opposition Labour party has demanded UK prime minister Boris Johnson take urgent action to counter a dramatic spike in household energy prices in the coming months.

Ed Miliband, shadow business secretary, said the rise in the cost of gas was “deeply concerning” for consumers and businesses.

“While there are global issues involved, the government cannot simply ignore this problem and must act,” he told the Financial Times.

With wholesale gas prices now five times their level two years ago, the cost of household energy is set to rise up the political agenda in autumn. Bills will increase to at least 12 per cent in October for 15 million householders with a further jump predicted in spring.

Miliband said the news highlighted the need for Britain to protect the security of its energy supply by accelerating the provision of domestic zero-carbon power.

“But the last decade of Conservative government has been marked by mixed signals and indecision, whether in selling off the Green Investment Bank or slashing subsidies for onshore wind and solar power,” he said.

“We need more decisive action from government to protect household bills and our climate.”

Miliband was Labour leader in 2013 when he pledged to freeze energy prices in an intervention that set the political weather for many months. The plan eventually led to the Tory government introducing a “price cap” on energy bills in 2019.

The issue is returning to the political agenda after Ofgem last month confirmed a 12 per cent increase in the “price cap” from October, which regulates the maximum tariff that energy companies can charge 1m households that chose not to switch to fixed-price deals.

The new price threshold is based on a number of factors including wholesale gas and electricity costs, which make up 40 per cent of fuel bills, as well as government levies.

The continuing rise in wholesale bills mean another tariff increase is widely expected when Ofgem carries out its next review in February.

Some senior government figures fear that rising energy bills combined with wider inflationary pressures in the economy could prompt a looming cost of living crisis.

Centrica, the owner of British Gas, warned this week it fears a cold winter could lead to gas prices soaring even further to levels where some businesses need to shut down or restrict output, given the tightness in global supplies.

Ministers are under pressure from backbench MPs who fear Johnson’s pledge to decarbonise the entire economy by 2050 could add to consumer costs, such as ripping out gas boilers and replacing them with expensive electric heat pumps.

Peter Smith, director of policy and advocacy at fuel poverty charity National Energy Action, told the Financial Times “these soaring energy prices could not be coming at a worse time”.

The increase in October means bills will rise to levels last seen in 2013 during the Cameron government.

The two separate “price caps”, standard and prepayment, protect some 15m British households against sudden rises in gas bills.

Customers who are trying to renegotiate fixed-price energy deals are struggling against the price surge. Some companies are offering fixed deals hundreds of pounds in excess of their standard tariffs, when the former would normally be considerably cheaper.

Citizens Advice, the consumer charity, has estimated that two millions households were behind on their energy bill payments even before the October cost increase.

Campaigners are concerned even more people could fall into fuel poverty this winter as the surge in bills will coincide with the removal of a £20-a-week uplift to universal credit, introduced to boost benefits during the Covid-19 crisis, in October.

“The UK government and energy regulator need to wake up to the toxic impacts of even higher energy prices, reduced incomes and poor housing which will badly damage physical and mental health this winter,” said Smith.

“We are already seeing the desperate consequences of not being able to heat homes, significant rises in general inflation and millions of people are deeply worried they will shortly see a massive reduction in their incomes [when uplifts to universal credit are withdrawn].”

The government admitted the UK was dependent on “volatile global gas prices” and said ministers were focused on building a robust domestic renewable energy sector.

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