There are tough times ahead – and the first surge in household bills is weeks away. Here’s what I’m doing to prepare as best I can: JEFF PRESTRIDGE
Although Labour delegates left Liverpool last week in a mood of euphoria, their joy wasn’t shared by those outside the conference bubble.
Far from it. I was shaking with fear, and not just because of the culling of the pension triple lock. Times are tough and will get tougher. For all of Andy Burnham’s charm and charisma, households face a difficult financial future.
Bills are rising, inflation is untamed, hikes in mortgage rates are likely and taxes (for sure) will rise in the Budget this month (cutting taxes is not in Labour’s DNA).
For most households, the first cost going skyward will be their energy bill. It will soar in the coming months as winter bites.
So far I’ve managed to live without heating in my terraced home in Wokingham, Berkshire, which I moved into in April.
But with my new eco-friendly Hive thermostat set to trigger the central heating at 18C, it’s only a matter of time before the numbers on the electricity meter start whirring round.
Yet for many, the cost of having the heating on will be made worse by higher unit prices (and daily standing charges) for electricity.
In the run-up to the 2024 election, Ed Miliband said household energy bills would fall by £300 by 2030… it will take a miracle of biblical proportions for Miliband’s promise to come true
This is a result of the new price cap set by regulator Ofgem which came into force on Thursday and applies until the end of the year.
This higher cap means those households on a standard variable rate dual tariff (and paying by direct debit) will see bills rise on average by 3.6 per cent – from £1,663 a year to £1,723.
These numbers are averages but they give you a flavour of what is coming your way. The hike would have been greater if it hadn’t been for Labour’s decision to declare a six-month suspension of VAT (5 per cent) on household energy bills which runs until the end of March next year (thank you, Andy).
Yet there is worse to come. According to energy consultant Cornwall Insight, household bills could rise 16 per cent at the start of next year (even with the VAT suspension still in force).
I’m Simon Lambert, publisher of This Is Money, and you need to know that your pension, savings and property could soon be under attack.
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If this happens, it would push typical annual energy bills to £1,999 – their highest since 2022 when Russia invaded Ukraine.
For one Labour minister in particular, the upward direction of energy prices will be acutely embarrassing.
In the run-up to the 2024 election, Ed Miliband said household energy bills would fall by £300 by 2030, a result of Labour’s ‘green prosperity plan’ (a classic oxymoron).
With 2030 creeping up on the horizon, it will take a miracle of biblical proportions for Miliband’s promise to come true.
When Labour came into power and Miliband was made Secretary of State for Energy Security and Net Zero, the price cap was set at £1,568. That means today’s price cap is £155 (9.9 per cent) higher than in July 2024 – and if Cornwall’s forecast is correct, the next cap will be £431 (27 per cent) higher.
Miliband, dream on.
A great way to counter rising energy prices is to search out a fixed rate deal.
It’s what I did when I moved into my new abode. I locked into a two-year fixed-rate deal with EDF. I’m currently paying a bit more for electricity – the fixed unit price is above the cap rate – but I’m quids in when it comes to gas (my unit price is way below the cap rate).
If Cornwall is right, the fix will come into its own next year when energy unit prices soar and mine don’t.
Chancellor John Healey could bring in measures to reduce household energy bills in the Budget but I imagine they will be targeted at low income households rather than be universal in scope.
Britain’s finances are not robust enough to support a version of the 2022 energy support scheme (£400 off bills) which cost £12billion.
I’ll be doing my best to keep my energy bills in check – so no baths, just showers, and letting my washing machine and dishwasher do their work at lower temperatures.
With a roofing company booked to repoint the chimney and upgrade loft insulation, my home should be nice and snug to withstand the worst of the weather.
