New PM told to ‘think the unthinkable’ on energy bills – as British Gas announces plan to help | Business News
The government must increase the discount on energy bills by at least 150% or risk pushing millions of households into poverty.
That’s a warning from the consumer group Which? ahead of Friday’s announcement of an energy price cap for three months from October.
It comes as British Gas announced it will donate 10% of its profits to help its poorer customers cope with soaring bills during “times of the energy crisis” – bringing in 12 million table this fall into existing aid funds.
The company, the UK’s largest energy supplier, enjoys £1.3 billion in operating profit in the first six months of 2022, five times the amount in the same period last year of £262 million.
Its owner, Centrica, says thousands of households will receive grants ranging from £250 to £750. Customers who are fuel-poor and save less than £1,000 are eligible to apply for the grant.
Centrica boss Chris O’Shea said the move means “we can target helping those who need it most … during this difficult time”.
In May, the government said it would offer a £400 per household discount on energy bills, with more help for those deemed vulnerable, such as the disabled or pensioners.
This was announced as the energy price cap was predicted to hit around £2,800 in October, but more recent forecasts predict £3,554 in October, £4,650 in January and more than £5,300 in May. 4.
What? says government support should therefore increase from £400 to £1,000 – or from £67 to £167 a month between October and March.
But even this is not enough for the lowest earners, Which one? said, adding that they would also be paid an additional one-time minimum payment of £150.
Rocio Concha, which one? The director of policy and advocacy, added: “While increased support will bring relief to many, it is not a long-term solution.
“Governments and regulators must urgently conduct a wide-ranging review of retail energy pricing – including price caps – to build a fair and affordable system for consumers.” .
“The government must also develop an urgent program to improve the insulation of homes – as this will help reduce residents’ energy costs for years to come.”
Meanwhile, the Resolution Foundation says, even with announced support, the four million metered users – often the most vulnerable – will spend around 44 percent of their revenue. Enter their monthly availability for bills.
Jonny Marshall, a senior economist at the Resolution Foundation, said: “A disaster is coming this winter as rising energy bills threaten to cause severe physical and financial damage to families across the UK.
“We are waiting for thousands of people to see their energy completely cut off, while millions will be unable to pay their bills and (will) accumulate unmanageable debts.
“The new prime minister will need to think unimaginably about the policies needed to get full support where it is needed most.
“Significant extra support should be targeted at those most at risk with rising bills and least able to deal with them, and should be watertight so no one falls through the cracks. .
“But none of the proposals from leadership candidates or opposition parties currently fail to do this.”
The fund also calls for a new social energy tariff for low- and middle-income households, funded by an additional 1% above the income tax rate.
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Mr Marshall said it would be “an unthinkable policy amid the debate among leaders, but a practical solution to the realities facing families this winter”.
Alison Garnham, Executive Director of the Child Poverty Action Group, added that low-income families will fall short of their energy bills by an estimated £1,000 in the year to April 2023.
“Over the next few months, families will need additional support to cover their costs and reflect family size, and social security must increase to match inflation from April,” she said.
“Four million children have fallen into poverty along with many others who are at risk. Leaving their families under water is not an option.”
A spokesperson for the Department for Business, Energy and Industrial Strategy said: “We know the pressures people are facing with rising costs, which is why we are taking action directly. to help households with a £37 billion grant.
“In addition to providing the eight million most vulnerable households with £1,200 in support this winter, we are also investing £6.6 billion in this parliament to improve energy efficiency. Energy as part of the government’s ‘Help to Heat’ program is making it cheaper for households across the country to heat.”