Thank you also for raising your concerns about energy bills and the cost of living.
CPI inflation is now at a 40-year high and rising, driven primarily by soaring energy bills. The energy price cap set by the regulator Ofgem was set to increase from October 2022 to the equivalent of £3549 per year for the average family on a dual-fuel bill.
I am very pleased to say that all households regardless of income will now benefit from the Government’s Energy Price Guarantee, which caps energy bills at a level equivalent to £2500 per year for the same average family on a dual-fuel bill. In practice smaller households in smaller properties are likely to see lower bills due to lower energy usage – the cap is on the per-unit cost of energy so less use will mean lower bills.
Every household in the UK with a domestic electricity connection will also benefit from the Energy Bills Support Scheme, which will distribute a further £200 discount on energy bills to all households starting from October. In addition, the previous £200 energy bill reduction – originally intended as a rebate – will no longer need to be paid back, meaning every household will receive a £400 grant to help pay their energy bills.
There is a Cost-of-Living Payments of £650 for those receiving certain means-tested benefits, and all pensioners in receipt of Winter Fuel Payments are also eligible for a payment of £300 to help with the cost of living.
I continue to call on the Government to go even further than its current support in two important areas that would benefit all pensioners. Firstly, the simplest and most direct change the Government could make would be to eliminate VAT on energy bills entirely, a move that would immediately cut energy bills by a further 5% for every family in the country. This is a measure made possible by our exit from the EU, and one that I and other colleagues have called on the Prime Minister to take in a joint letter.
I am also calling now for an urgent, root and branch review of the role of our key utilities regulators and whether they are fit for purpose in the face of the current global energy crisis. Regulators need real ‘teeth’ to properly protect families and businesses, and I am determined for them to have all of the tools they need to protect families from unaffordable bills.
For pensioners specifically, I have also called on ministers to ensure State Pension increases fully reflect the reality of inflation as it is today – it was simply not good enough for the most recent increase to be based on inflation as it was in September 2021, a totally different time prior to the current spike in prices.
Regarding windfall taxes, in the Autumn Statement the Chancellor confirmed that the Government’s existing windfall tax (the Energy Profits Levy) will be increased and extended. From 2023, the Energy Profits Levy will increase to 35 per cent, and will be extended to 2028.
The Chancellor will also introduce a Levy on the profits of electricity generators. Currently, our energy prices are set by the wholesale price of gas. This means that generators of renewable energy, which have far lower production costs, are making extraordinary windfall profits at the moment. Therefore, from 1 January 2023, there will be a temporary 45 per cent levy on these low-carbon producers.
For constituents seeking advice on how to manage their bills in the short term, I have included a link below that has been put together by Ofgem alongside 20 expert bodies to the options and support available now. https://www.ofgem.gov.uk/sites/default/files/2022-08/Help_with_bills%20Eng_Wales.pdf
