THE Government has been urged to act now to avoid households taking a “seismic” hit to their energy bills which could force some to decide whether to eat or heat their homes.
Money Saving Expert founder Martin Lewis said the Government must intervene now to avoid a crisis in the energy market.
He predicted that energy prices are set to rise by “a minimum” of 50 per cent and said the crisis needs “substantial intervention”.
According to Cornwall Insights, an energy sector specialist, bills could rise from £1,277 a year under the current price cap to £1,865 a year when the next revision is announced, a rise of 46 per cent.
They also predict it could spike to £2,240 a year at the following quarterly revaluation in August 2022 without a significant fall in energy prices globally.
Mr Lewis said: “We need to look at what we can do now and how we can protect those people who will need to choose between heating and eating.
“There are already some who are having to make that choice.
“We need to look at the whole structure of the energy market.
“The Government didn’t intervene early enough so we’re all paying for the market collapses we’re seeing.”
His remarks were echoed by North East MPs, who said rising energy prices are just one part of a cost-of-living crisis which will hit families across the region this year.
Kevan Jones, Labour MP for North Durham, said: “The Government’s National Insurance increases in April, planned Council Tax increases and rising food prices are going to make it a difficult year for many.
“With increasing energy prices, the income from the VAT charged on gas and electricity means the Government’s income rises at the expensive of consumers.
“The Chancellor should immediately introduce a cut in VAT on energy cost to help alleviate the costs many are facing. More broadly there is an urgent need to review the current energy supply market which has clearly failed.’’
Durham City MP Mary Kelly Foy added: “We are now seeing a cost-of-living crisis about to spiral out of control under the Conservatives.
“As usual, working families and vulnerable people are going to be the hardest hit with many facing the painful dilemma as to whether they eat or heat. This shouldn’t be happening in 2022.
“As Martin Lewis rightly said, there must be greater protections in place for the most vulnerable who may be stuck on expensive pre-payment meters or are unable to shop around for the best deals.
“Labour is calling on the government to immediately remove VAT from domestic energy bills this winter. It’s the least the Conservatives can do after overseeing a pandemic so catastrophically that workers and families are now feeling every pinch. It should not be working people who are made to pay for the Government’s failings.”
Several firms went bust in 2021, with customers at other energy firms picking up the tab for the collapses, whilst the Government also took over the running of Bulb after it failed last November.
Ofgem has subsequently announced changes to how much other energy firms, and eventually customers, can be forced to pay to fund rivals’ collapses.
However, many in the industry say more needs to be done to avoid future companies from going bust and stricter rules put in place over who can run suppliers.
Mr Lewis added that there needs to be greater protection for the most vulnerable, who may not be able to shop around for the best deals, or may be stuck on more expensive pre-payment options.
He said: “What’s coming in April is a seismic hit for fuel bills which is going to be astronomical.
“The Government has been meeting the energy industry but they’ve not been meeting the consumer groups.
“Certainly, I’ve not heard of any taking place
“They have to sort this now because if we leave this before it’s too late it will be a disaster.”
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