UK is ‘out of time’ to act on energy crisis

Ministers have been accused of a lack of urgency in tackling soaring energy bills, with one retail boss saying the country is now “out of time” to deal with the crisis.

Ofgem will reveal the level of October’s price cap on Friday (26 August) and the latest forecasts indicate it could reach almost £3,600, with costs set to increase further next year.

Yet bosses from two energy retailers have voiced their concerns that the Conservative leadership contest is preventing swift action being taken to alleviate the pressure on consumers.

Following talks between ministers and representatives from industry earlier this month outgoing prime minister Boris Johnson stated it will be up to his successor to make any significant decisions on further support for people struggling to pay spiralling energy bills.

Speaking to Utility Week, Utilita chief Bill Bullen said he was “extraordinarily frustrated” over the lack of an announcement from government.

“I understand that the Conservative leadership contest was kicked off a while ago,” Bullen said. “This problem has been growing and growing over the same time because as I say, gas prices have been accelerating away and I think it’s time now for them to get really focused on it and to really understand quite what it is going to mean if average energy prices do go to £3,500.”

Bullen has this week written an open letter to business secretary Kwasi Kwarteng in which he outlines his concerns.

He said continuing with the Energy Bill Support Scheme (EBSS) is not sufficient to tackle the issue and instead called on the government to freeze the price cap at its current level of £1,971.

Freezing the cap, Bullen said, will stop energy prices fuelling inflation. He stressed that the decision must be taken before Ofgem’s announcement later this week.

“Failure to do that will reflect badly on the administration, incur unnecessary cost, and result in a further period of uncertainty and fear,” he said.

Bullen added that a price cap freeze will contain the additional help needed to hundreds, rather than thousands, of pounds and single digit millions of homes rather than tens of millions.

“We are out of time, and I urge you to act swiftly and boldly, and to demand that your colleagues in government support you in this approach,” he said.

Speaking on BBC’s Good Morning Scotland programme earlier today (23 August) Scottish Power Boss Keith Anderson said the idea of a deficit fund is being “seriously considered” by the government.

Meanwhile So Energy co-founder and executive director Simon Oscroft also voiced his concerns about the lack of urgency within the government.

He said the price cap forecasts are “well beyond what anyone could ever imagine and well beyond what a huge amount of our country can afford to pay”.

He told Utility Week: “We’ve seen analysis that shows, based on January’s figures, potentially two-thirds of homes will be falling into fuel poverty, which is frightening because of the scale of what we’re facing.

“Given how significant this is, we need to see huge and swift government action. Unfortunately, we’ve not seen the level of urgency that it requires from government. Whether or not there’s a leadership election going on, government needs to protect its citizens. And there is a responsibility of everyone in government to be doing what they can to protect citizens.

“With every day that passes the mechanisms by which they do this get narrower, because taking actions earlier mean that you can target support more towards vulnerable customers.”

He added that while targeted support was welcome, support is needed for all households as well.

Oscroft said So Energy was in favour of the idea of freezing prices, as well as extending the EBSS and tripling or even quadrupling the Warm Home Discount.

He added: “The deficit fund is definitely a scheme that we’d be very supportive of… with the scale of the increase and what it’s going to do to people in the short term, we need a significant solution of that sort. We can have a price cap figure that is much lower and that feeds into the inflation number.

“We’ve seen an 18% forecast for inflation in January, this is levels above the 1970s crisis. So the sort of measure that we need is one that can really change the dynamic and the deficit scheme would be a solution where all customers can pay less, but then pay it back over the long term once.”

In response to the concerns a government spokesperson highlighted the £37 billion support package it has issued to tackle the cost of living crisis.

“In the immediate term, we are giving a £400 discount on energy bills over winter and 8 million of the most vulnerable households will see £1,200 extra support, provided in instalments across the year,” they added.

The frictions inherent in balancing net zero, security of supply and affordability are at the core of the agenda for the Utility Week Forum, on 8-9 November in London. Find out more here.