Cost of living crisis: Soaring energy bills to 'rise to £1,900 from April'

29 January 2022, 10:19 | Updated: 29 January 2022, 12:54

Skyrocketing energy bills are set to rise to £1,900 from April, with hardest-hit families facing desperate choices over whether to heat their homes or put food on their plates.

The steep rise - by almost half - comes as the price cap is reportedly set to be increased this week, based on wholesale prices over a six-month period that ends on Monday. The increase is set to come into force from April.

Industry analysts predicted the price cap would rocket to £1,897 for average users, up from its current level of £1,277 - an increase of 48 per cent, The Telegraph reports.

Global gas prices have surged dramatically in recent months, with ministers in disagreement about how to support those most feeling the pinch.

Scrapping VAT from energy bills is said to be the leading proposal being considered by ministers.

VAT is currently levied at five per cent, and could save households on a default “standard variable” tariff £90 a year. The move would cost the Exchequer about £2.5 billion.

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The reported rise in energy bills comes as a stark warning was issued by Age UK over rising costs.

The state pension is due to rise by 3.1 per cent in April, failing to keep up with the current rate of inflation - which hit 5.4 per cent last month.

Two in five pensioners said they would consider taking on debt to manage the rising cost of living.

Age UK said nearly a quarter (24 per cent) of older people believe they will be forced to choose between heating their home and the food they buy if their energy bills increase substantially.

More than half (54%) of those surveyed said they would have to heat their home less, a survey for Age UK found.

One 69-year-old woman told Age UK: "I am currently in bed keeping warm today as it's so cold and I can't afford to have my heating on for the whole day.

"I'm reduced to showering on alternate days, which I hate, and I'm eating food that's microwaveable to avoid heating my oven."

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Caroline Abrahams, charity director at Age UK, said: "Many older people are reliant on the state pension as their main source of income and simply do not have the flex in their finances to cope with such enormous price rises.

"At Age UK, we are being contacted every day by desperate older people in this position, people for whom there are only 'bad choices' - ration your energy use, cut back on food or other essentials, or go into debt."

She added: "Any older person who is finding it difficult to pay their bills, or who is worried about staying warm, can call us today - if we help you to submit a successful claim it could make all the difference.

"There really is no downside to checking you are receiving everything you are entitled to, so please come forward and let us help you make sure."

Read more: National Insurance rise: How much more will you need to pay?

On Friday, Downing Street ruled out scrapping a planned rise to National Insurance contributions, despite pressure from Tory MPs already wavering in their support for Boris Johnson.

Speaking on LBC's Nick Ferrari at Breakfast, culture minister Chris Philp said: "No, the plan it to proceed as intended, it was approved by the Cabinet, it was approved by Parliament.

"This National Insurance change, increase, puts £36 billion over three years into the NHS and social care.

"Successive governments of both colours have failed to sort out social care over many, this does that.

"We all I think acknowledge the NHS needs extra money to recover from the pandemic, this delivers that funding increase so it is the right thing to do."

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Instead, the Government is considering helping families by scrapping VAT on energy bills, freezing council tax and increasing the value and eligibility of existing schemes targeted at low income households.

Government sources confirmed that all of these options were on the table, but insisted that no final decision had been made.

In response to Age UK's survey a Government spokesperson said: "We know this has been a challenging time for many people, which is why we're providing support worth around £12 billion this financial year and next to help households across the country with the cost of living.

"Our winter fuel payments are supporting over 11 million pensioners with their energy bills and we are continuing to encourage those eligible for Pension Credit, and the wide range of other benefits it can provide, to make a claim."