Jeremy Hunt is under increasing pressure to cancel a planned cut to energy bill support as research showed that paying for heat and power will “eat up” nearly 10% of workers’ wages after the move in April.
The chancellor has so far resisted calls to ditch the change to the energy price guarantee, which will push up the cap on the typical annual household bill from £2,500 to £3,000.
However, analysis by the Trades Union Congress shows that monthly bills are expected to hit £250 from April – almost 10% of the £2,589 UK monthly salary – up from £208 a month at present.
After the cut in support the amount of monthly earnings spent on energy would be more than double the £107 a month typically paid in March last year.
Energy bills: calls for ‘social tariff’ when UK government support endsRead more
The energy price guarantee was introduced by the then prime minister Liz Truss last year, who promised Britons that annual bills for a typical household would be limited to £2,500 for two years.
Hunt later made the policy less generous, with a cap of £2,500 for six months until April, rising to £3,000 for a further year.
Bills are expected to be as much as 40% higher than last year from April, because of the reduction in support and also because the one-off £400 payment announced by the then chancellor Rishi Sunak last spring will not be replicated this year.
The TUC’s general secretary, Paul Nowak, said: “The government must cancel its imminent hike in household energy bills at next month’s budget. Families across Britain are being pushed to the brink by sky-high bills.
“That means imposing a larger windfall tax on greedy oil and gas suppliers. And it means boosting wages across the economy.”
The TUC joins the consumer champion Martin Lewis and 70 organisations in calling for the rise to be dropped. In a letter to Hunt sent earlier this month, Lewis said: “The damage to people’s pockets and mental health of another round of energy price rise letters is disproportionate.”
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National Energy Action has predicted that the number of households in fuel poverty will rise from 6.7 million to 8.4 million from April if the price guarantee increase is implemented.
On Monday, Ofgem will confirm the level of its price cap for the three months from 1 April. It is expected to fall by about £1,000 to just under £3,300. The energy price guarantee means typical bills should not reach this level but the cap is used to calculate the cost of covering bills for government.
The consultancy Cornwall Insight estimated that the £500 cut in how much of the typical bill is covered by the energy price guarantee would save the government £2.6bn.
