Nation faces £18bn bill rise as energy price cap to hit £2,800

Laura Suter
24 May 2022

Laura Suter, head of personal finance at AJ Bell, comments:

“The price cap increase in October is now expected to lump another £800 onto the average annual household bills – another leap in costs for many households. Around 22m people are now on the price cap tariff – double the number this time last year. The additional £830 on the average bill means the nation will be paying an extra £18.3bn for their energy costs from October.

“The hike is even more stark when we consider that in September last year the average bill was £1,138 – an amount that seemed a lot at the time but has been eclipsed now. It means the average household will have to find an extra £1,662 just to pay for the same energy to heat their homes or cook their food over the past year.

“What’s tough for most households is that there is no other option – all the fixed rate deals out there are far higher than October’s price cap rate. What’s more, Ofgem’s planned changes to the price cap mean that people need to brace for another potential increase just three months after this one. 

“At £2,800 the average energy bill will now represent 30% of the annual state pension payment for a single person and 70% of the amount a single person gets each year from Universal Credit*. It now feels almost impossible that the Government can ignore the pressure these rising bills are putting on the lowest income households.

“The Government isn’t short of ideas that have been suggested, from turning the £200 energy loan scheme into a grant, or increasing the Warm Home Discount, to bringing forward benefit increases or handing out another council tax rebate. But waiting until October to announce any handouts feels both unlikely and cruel to those families struggling now.”

*based on a single person over the age of 25 with no children and getting no additional top-ups.
 

Laura Suter
Head of Personal Finance

Laura Suter is head of personal finance at AJ Bell. She is a multi-award winning former financial journalist, having specialised in investments. Laura joined AJ Bell from the Daily Telegraph, where she was investment editor. She has previously worked for adviser publications Money Marketing and Money Management, and has worked for an investment publication in New York. She has a degree in Journalism Studies from University of Sheffield.

Follow us: