UK to Extend Energy Price Cap as Fuel Stress Deepens
- May 11, 2022
- Posted by: Quatro Strategies
- Category: Energy
The British government revealed plans on Tuesday to extend the price cap on the most widely used domestic energy contracts beyond 2023, as part of its legislative plans for the year.
The cap has been in place since January 2019 and was due to expire in 2023. It had risen by 54% in April, leaving around 5 million households struggling to pay their bills. Energy bills for some 22 million customers have been expected to go up by hundreds of pounds a year.
The cap is set to rise again in October, pushing another 2.5 million households into fuel stress, meaning they will have to use at least 10% of their budget for energy bills.
British Finance minister Sunak has been the focus of criticism for not doing enough in a budget update to protect the poorest households through the most serious hit to living standards since at least the 1950s.
The poorest fifth of households is estimated to spend more than twice the share of their budgets on energy bills than the richest fifth, even after taking into account a new government tax rebate scheme.
Some 24% of households in the north east of England are now in fuel stress, which could rise to 41% in October.
Experts call for a long-term strategy for improving home insulation, ramping up renewable and nuclear electricity generation and reforming energy markets so that household energy bills are less dependent on volatile global gas prices.
They also argue that the benefits system rather than tax rebates would be a more effective way to help the hardest-hit households.
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