The Office of Gas and Electricity Markets (Ofgem) announced on Thursday morning that the energy price cap will be increased by £693.
The price cap increase will see the average energy bill rise to £1971. The increase is set to affect 22 million households across England, Scotland and Wales.
Those on prepayment meters will see their costs increase by around £708, on average.
The price cap has been increased primarily due to the rising price of wholesale gas, with Rishi Sunak saying that this accounts for around 80% of the increase.
The Chancellor announced that several measures would be put in place to lessen the impact that the cap increase has on UK households:
In England, Scotland and Wales, a £200 discount will be applied to electricity bills in October, which will then be repaid in £40 instalments over the next 5 years. Northern Ireland will be granted £150 million to provide its own support scheme.
For England, a £150 council tax non-repayable tax rebate will be made available to households in council tax bands A to D, while the devolved administrations will be provided with £565 million to provide similar help.
The hope behind these discounts is that the majority of UK households will receive around £350 off this year’s energy bill, to, in the words of the chancellor “take the sting out” of the price increase.
The Shadow Chancellor Rachel Reeves accused the £200 discount of being a “buy now pay later scheme that loads up costs for tomorrow”. Reeves said that it was a “sad truth” that working families, including the poorest families will still be forced to pay hundreds more for their energy bills this year. She claimed that Labour’s proposal to increase the warm homes discount to £400, and extend it to cover 9 million UK households, would be a more effective way to target relief, and that combined with Labour’s proposed VAT cuts the impact of the increase could be cushioned more effectively. She also brought up that Shell’s reported profits quadrupled over the past year, arguing that this is a better source of funds to balance rising gas costs than through price hikes for working people.
“The Conservatives aren’t solving the cost of living crisis, because the Conservatives are the cost of living crisis”
Sunak claimed that the VAT cuts would only save £90 per household per year.