Energy bills to soar for millions as Ofgem increases price cap - Liverpool already hit hard

Ofgem confirmed bills will soar by £693 per year for the average household. It comes after a stark warning that people in Liverpool have already been hit hard.

The 54% energy price cap increase announced by industry regulator Ofgem today is expected to have a crippling impact on energy bills for millions of households.

The cap is the maximum price suppliers can charge customers who are not on a fixed tariff.

Bills for the average customer could rise from £1,277 to £1,971 - a significant increase of £693 - after gas prices soared to unprecedented highs.

For customers with prepayment meters the price cap will go up by £708 to £2,017, the regulator said.

Energy warnings in Liverpool

Last month, an alliance of charities gave a stark warning to the Government after the release of stats about how much more people in Liverpool were already having to pay towards energy bills.

Research conducted by Boiler Central looked into the proportion of the average weekly household budget that is spent on energy throughout the United Kingdom compared to London.

The information shows that Liverpool and Northern Ireland are the worst hit areas, spending between 40-50% more of their weekly budget on energy than Londoners.

The alliance, which is made up of 25 charities, pointed out that people are being left with “the impossible choice” of heating homes or buying clothes for their children.

The raise in price cap could make those figures even more stark, with up to 22 million households around the country expected to be affected.

Energy bills are expected to go up for millions of households (Photo: Shutterstock)
Energy bills are expected to go up for millions of households (Photo: Shutterstock)
Energy bills are expected to go up for millions of households (Photo: Shutterstock)

The energy price cap

Ofgem’s new price cap level will come into force in April and remain fixed at that level for six months, but could rise even further afterwards.

It marks a 54% rise from the current price cap, which was already a record high when it was set at £1,277 in October.

The change will affect around 22 million households which are currently thought to be on an energy deal linked to the price cap.

Many of these will likely be put under major financial distress because of the price spike, which has been caused by a manifold increase in global gas prices.

The tariff changes:

Customers on the standard default tariff will see an increase of £693 to £1,971.

Prepayment customers will see a rise of £708, from £1,309 to £2,017.

How Chancellor plans to help UK households

Following the sharp rise in the energy price cap, Chancellor Rishi Sunak announced three measures intended to help households.

  • A £150 rebate on council tax bills for homes in Bands A-D, which will benefit 202,713 households in Liverpool.
  • A £150 mi for local authorities, such as the six boroughs that make up the Liverpool City Region, for a discretionary fund to help lower-income households.
  • A £200 discount on all electricity bills from October - which will need to be paid back by households at a later date.

However, the measures have come in for some fierce criticism from opposition parties.

Labour’s shadow chancellor Rachel Reeves suggested the £200 loan discount was nothing more than a "buy now pay later scheme that loads up costs for tomorrow" and said Sunak should have scrapped VAT on energy bills instead.

The council tax rebate was also questioned as the scheduled increase in National Insurance contributions is due to take £200 out of the pocket of a worker who earns around £30,000 per year.

Tips to save money on your energy bills

  • People use the most energy in the evenings - so, make a conscious effort to turn off all appliances at the wall after you have finished cooking, and the same with things like laptop and phone chargers.
  • If an item like a dishwasher or washing machine breaks, make sure the replacement is energy efficient. An A+++ appliance will save you money in the long run.
  • Wash your clothes at a lower temperature - 30 degrees is more than enough to clean the majority of your clothes.
  • Draught-proof your home by sealing cracks in skirting boards, letter boxes and chimneys.
  • If you are on a standard variable tariff, be sure to compare energy suppliers. Whilst all suppliers are affected by the price cap, you may be able to get a better deal elsewhere.
  • Businesses can carry out an energy audit, where an expert can identify the areas of your business zapping the most energy - from lighting to standby equipment.