By Arthur Parashar and Mark Duell and Elizabeth Haigh For Mailonline
Published: 15:15 EDT, 26 August 2022 | Updated: 20:33 EDT, 26 August 2022
Are you going to struggle with energy bills this winter? Please email: james.robinson@mailonline.co.uk
Millions of British households have been warned to brace for double digit inflation to last until winter next year - as energy bills are set to rocket a staggering 80% in October in the biggest crunch to living standards the country has faced since the 1950s.
Economists have said that Consumer Price Index (CPI) inflation - the UK Government's official measure of the rate of rising prices - could remain above 10% for the next year and more. Already spiralling costs are set to surge even if Bank of England chiefs hike interest rates, Bank of America economist Robert Wood has forecast.
It comes amid warnings that the savings of around six million British households could be wiped out after energy regulator Ofgem raised the price cap by 80% - sending the average household's yearly bill from £1,971 to £3,549 from October. There are also around 2.2million additional households who will be forced to use up every penny of their savings come April 2024, according to research by the National Institute of Economic and Social Research (NIESR).
The poorest households will be forced to spend 25% of their income just to keep their lights on. The grim predictions have piled even more pressure on Tory leadership rivals Rishi Sunak and Liz Truss to pledge further action to combat the rising bills.
The Ofgem cap announcement today will come into effect for around 24million households in England, Scotland and Wales on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again.
The 4.5million pre-payment meter customers across Britain, who are often the most vulnerable and already in fuel poverty, will see an even more punishing increase - with their average annual bill set to go up to £3,608.
And things could get even worse next year, with experts at consultancy Auxilione using latest gas prices to predict that the cap will rise by another 52 per cent to £5,405 in January 2023, then by a further 34 per cent to £7,263 in April - before falling slightly, by 11 per cent to £6,485 in July and by another 7 per cent to £6,006 in October.
MoneySavingExpert founder Mr Lewis, who became emotional at times while giving passionate interviews to TV and radio shows this morning, told BBC Radio 4's Today programme: 'I've been accused of catastrophising over this situation. Well, the reason I have catastrophised is this is a catastrophe, plain and simple. If we do not get further government intervention on top of what was announced in May, lives will be lost this winter.'
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The consumer champion also said the latest rise in the cap means some people will pay up to £10,000 a year in bills. And he warned that there is no cap on the maximum you pay – but the cap is actually a maximum cost per unit that firms can charge for gas and electricity. Currently, this equates to £1,971 a year for the average home.
Ofgem said that from October 1 the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 52p per kWh for electricity customers and a standing charge of 46p per day. The equivalent per unit level for a typical gas customer is 15p per kWh with a standing charge of 28p per day.
As business groups and think tanks offered stark warnings over the crisis throughout the course of today:
Ofgem's chief executive Jonathan Brearley warned of the hardship energy prices will cause this winter and urged the incoming prime minister and new Cabinet 'to provide an additional and urgent response to continued surging energy prices'. He also said that the gas price this winter was 15 times more than the cost two years ago.
The regulator said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the pandemic eased, and had been driven still higher by Russia slowly switching off gas supplies to Europe.
Ofgem also warned that energy prices could get 'significantly worse' next year. The regulator said that some suppliers might start increasing the amount that direct debit customers pay before October 1, to spread out payments, but any money taken by suppliers will only ever be spent on supplying energy to households.
Philippe Commaret, the managing director of energy giant EDF, has warned that half of UK households could be in fuel poverty in January as a result of rocketing prices. And the Trades Union Congress has said energy bills will rise 35 times faster than wages and 57 times faster than benefits in the last three months of this year.
Which? has urged the Government to raise its energy bills discount by at least 150 per cent or risk pushing millions of people into financial distress. The consumer watchdog said Ministers' financial support for all households must increase from the current £400 to £1,000 - or from £67 to £167 per month from October to March.
The Ofgem price cap will rise from £1,971 now to £3,549 from October 2022, it confirmed today. And experts at energy consultancy Auxilione now think the cap will rise by another 52 per cent to £5,405 in January 2023, then by a further 34 per cent to £7,263 in April - before falling slightly, by 11 per cent to £6,485 in July and by another 7 per cent to £6,006 in October.
An Ofgem graphic shows changes in the components making up the direct debit level of the cap, shown for dual fuel usage
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However, no immediate extra help will be announced by Boris Johnson's Government, with major financial decisions being postponed until either Liz Truss or Rishi Sunak is in No 10 after the Tory leadership contest.
Miss Truss pledged 'immediate support' to help with soaring bills if she becomes prime minister, saying she would use an emergency budget next month to 'ensure support is on its way to get through these tough times'. Miss Truss and her rival Mr Sunak have also both pledged to continue a £15billion support package unveiled in June.
Chancellor Nadhim Zahawi said the increase in the cap would cause 'stress and anxiety' for people but that the Government was working to develop more options to support households. He also blamed Russian president Vladimir Putin for 'driving up energy prices in revenge for our support of Ukraine's brave struggle for freedom'.
He also suggested people could need to ration energy, saying: 'The reality is that we should all look at our energy consumption. It is a difficult time. There is war on our continent. Very few people anticipated war. Wars happen in far-flung places. It is now here with us. We have to remain resilient. My responsibility is to deliver that help.'
The charity National Energy Action said the number of UK households in fuel poverty will have doubled in a year when the October cap rise takes effect. It calculates that 8.9million homes will be in fuel poverty from October - up from 4.5 million last October – and also takes into account the Government's support package revealed in May.
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Mr Lewis has said the rise in the price cap means some people will pay up to £10,000 a year in bills. He told ITV's Good Morning Britain the situation is a 'genuine social and financial catastrophe that is putting lives at risk'.
He went on: 'I'm noticing many media organisations saying that the price cap is £3,549 a year - that isn't correct. The price cap is actually a cap on the standing charges and unit rates that you pay, they have gone up by around 80 per cent.
What is the energy price cap?
The energy price cap decides the maximum cost per unit that energy companies can charge for both gas and electricity. This is then used to calculate a typical annual bill.
The price cap was introduced in January 2019 as a way to ensure that households who do not have fixed deals - and who are, in some cases, less financially savvy - are not ripped off by their energy suppliers.
Twice a year, energy regulator Ofgem would set the maximum price that households on their supplier's default tariff would have to pay for every unit of gas and electricity they used for the next six months.
It allowed for a small profit - capped at 1.9 per cent - that energy suppliers were permitted to take for supplying the service. The frequency of the cap was increased on August 4 from every six to every three months.
How is the price cap calculated?
The cap is calculated by Ofgem based on the wholesale price of gas and electricity and also includes allowances for tax, charges paid to the energy networks, green levies and social payments.
What is happening to the price cap?
The price cap is going up significantly. The 80 per cent rise announced today - which comes into force from October 1 - will push the cap to £3,549 per year for the average household. This is the highest it has ever been.
Can my bills be higher than the price cap?
Experts warn there is no cap on the maximum households pay – but the cap is actually a maximum cost per unit that firms can charge for gas and electricity. The actual cap for each home therefore varies according to use.
Ofgem said that from October 1 the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 52p per kWh for electricity customers and a standing charge of 46p per day. The equivalent per unit level for a typical gas customer is 15p per kWh with a standing charge of 28p per day.
Why is the price cap going up?
The price cap on energy bills is linked to the wholesale price of gas and electricity, which is itself based on what happens on European markets.
The wholesale price of gas has soared by around eightfold in the last year. That rise has been passed onto customers in increments - the price cap was already at a record £1,971 over the summer.
Gas prices were already increasing last summer as demand bounced as countries emerged from lockdown but the situation was made much worse when Russia invaded Ukraine and started to restrict gas exports to Europe.
Gas prices are also decisive for electricity prices, because gas is so important for the generation of electricity. Over the last year, 42 per cent of the UK's electricity came from burning gas.
Ofgem said the increase reflected the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic, and had been driven still higher to record levels by Russia's actions.
When will the price cap change again?
The price cap will be changed again in January 2023. It used to be changed twice a year, but changes announced on August 4 mean it will be reviewed every three months. It will change again in April, July and October 2023.
What is the price cap likely to be like next year?
Experts expect the cap to rise significantly in January 2023 and again in April, and then to fall back again in July and October next year - but the exact levels of the cap remains to be seen.
Experts at Cornwall Insight expect the cap to hit £5,387 in January 2023, while those at consultancy Auxilione think it will hit £5,405. In April, Cornwall expects a £6,616 cap, while Auxilione believe it could reach £7,263.
There is then an expectation that the price will fall. Cornwall's forecasts for the July and October 2023 caps are £5,897 and £5,887 respectively, while Auxilione expects it to reach £6,485 and £6,006.
What does the new price cap mean for monthly bills?
Experts at Uswitch estimate that monthly bills in October, November and December this year will hit between £243 and £513 a month, depending on the size of the home and usage, and based on the October price cap.
They say 'low user groups' are usually one or two people living in a one to two-bedroom flat, who are at home in the evenings and weekends and have a weekly laundry cycle. They also use the heating occasionally and don't use a dishwasher or tumble dryer. These people are likely to spend around £243 a month on energy bills from October.
Then, 'medium user groups' are typically families of three or four people living in a three-bedroom house. Some members are home in the day as well as in the evening and weekends. The heating is used regularly, and electrical appliances are often turned on. Laundry is done three times a week. Their average energy bill is likely to be £363.
Finally, 'high user groups' tend to be large families with five or more living together in a four-bedroom house or larger. There is always someone at home in the day and and in the evenings and on weekends.
There could be multiple television in use as well as a tumble dryer and dishwasher which are used regularly. Laundry is done daily. These groups are likely to face a bill of £513 a month from October.
What is the cap's purpose?
When Theresa May's government introduced the cap in January 2019, the aim was to protect households against profiteering energy giants. It would also, in theory, protect customers against sudden increases in bills.
More recently, Ofgem has allowed the cap to rise in a way that protects energy firms from going bust amid the soaring cost of wholesale gas and therefore electricity.
The effect is that bills are rising more sharply, and more often, to ensure suppliers can cover the spike in the wholesale prices of gas and electricity, which are around ten times higher than normal.
Who is affected by the price cap?
The new cap will come into effect for around 24million households in England, Scotland and Wales on default energy tariffs on October 1, and will remain in place until December 31, when it will be adjusted again.
A few million people are on long-term fixed rates - which are not affected by the cap. However, many of these deals are expiring in the next few months.
What is the cheapest way of paying for energy?
Paying by direct debit tends to be the cheapest way of paying for electricity and gas, because energy companies normally provide a discount for those using this method as it reduces their costs and administration time.
What about those on pre-payment meters?
The 4.5million pre-payment meter customers, who are often the most vulnerable and already in fuel poverty, will see an even more punishing increase, with their average annual bill set to go up to £3,608.
What support is available for you?
It depends on your personal situation. All households have been promised a £400 discount on their energy bills. This support was announced in May, and will be paid in six monthly payments from October.
For direct debit customers this will be taken off their payments, while prepayment meter customers will be given discount vouchers from the first week of every month. These will be issued by text, email or by post.
Eight million of the most vulnerable households will also get extra support, taking the total they can get to £1,200.
These include a £650 one-off payment to households on means-tested benefits, a £300 payment to pensioners, and £150 for six million people who receive disability benefits.
Will the Government announce more support?
Charities, think tanks, opposition parties and potential future prime ministers have said the Government will need to do more for struggling households. But extra support will have to wait until the next prime minister is in place.
Consumer watchdog Which? has said the Government's financial support for all households must increase from the current £400 to £1,000 - or from £67 to £167 per month from October to March.
However, no immediate extra help will be announced by Boris Johnson's Government, with major financial decisions being postponed until either Liz Truss or Rishi Sunak is in No 10 after the Tory leadership contest.
The current Government has said that it is exploring the options and will present them to the new prime minister when he or she comes into office next month.
'The figure that's quoted, the £3,549, is what the cap would be for someone who has typical usage - of course, most people don't have typical usage, they're more or less.
'That means there is no maximum amount that you can pay for gas or electricity.
'You could easily be paying £5,000 or £10,000 a year if you have high usage.
'I worry terribly for some of those who have disabled children or disabilities themselves who need lots of electrical equipment to keep their houses warm because of medical conditions.'
He also said energy prices will be 'unaffordable' this winter.
Mr Lewis said: 'The prediction now in January is up another 51 per cent on top of where we are now and that would take a typical bill and direct debit to £5,386 a year.
'And that is not such a crystal ball prediction because we are seven months through the 10-month assessment period for the January price cap.
'So if we look at the totality across the winter, from October until March, you are probably talking on typical use an average bill of over £4,400 a year, typical pro rata - it is totally unaffordable.'
He also said a movement to refuse to pay energy bills is 'growing', as he called on the next Prime Minister to spend billions to solve the crisis.
Mr Lewis told ITV's Good Morning Britain: 'I think the Don't Pay movement is growing. There are dangers to being in the Don't Pay movement as an individual.
'All I can say is what would happen in a typical case scenario where an individual refused to pay - what is far more difficult to predict is if there is a massive movement not to pay.
'I think what is safest for me to say is while I think it should have come earlier, my hope is on September 5 there will be a new Prime Minister. We've heard from both the candidates, but they seem to indicate they understand the scale of the crisis - what we need to hear is concrete solutions.
'And let's be absolutely plain: there are many methods that you can put in place to alleviate and mitigate some of the terrible damage that the rising energy prices are causing.
'So I'm going to be agnostic over the solution, but it will involve spending substantial amounts, billions of pounds of Government money, to stop some of the most vulnerable and many middle income earners from having some terrible choices to make this winter. We have to hope that will be in place.
'And I suspect if it isn't in place, then people coming from the Don't Pay movement are going to become a louder voice in this country.'
Prime Minister Boris Johnson said the Government will announce 'extra cash' in September to support households during the energy crisis.
Speaking on a visit to South West London Elective Orthopaedic Centre in Surrey, he said: 'Of course, we could see this coming (energy bills rising) and that's why we've put the steps in place that we already have.
'And don't forget that, although there will be more announcements next month, more cash coming from September onwards, you shouldn't forget that the pipeline of cash stretches out throughout the autumn.
'So, there's going to be another £650 coming for every one of the eight million most vulnerable households in October.
'In November, another £300 to help every pensioner, £150 extra for everybody who is entitled to disability benefits. On top of what we're doing with Universal Credit and the living wage, lifting both of those up.'
He added: 'There's a pipeline of cash coming through over the next few months and through the autumn and the winter. But that is clearly now going to be augmented, increased, by extra cash that the Government is plainly going to be announcing in September.'
Mr Johnson also said he does not think the Government should 'cap the whole thing' for 'the richest households in the country'.
He said: 'We want to target the households so most of the money will go to the eight million most-vulnerable households, that's the right thing to do. A lot of money will be going to absolutely everybody.
'What don't think we should be doing is trying to cap the whole thing for absolutely everybody, the richest households in the country. This will go on for a few months and it will go on over the winter.
'And it will be tough - and I'd be very clear about that - but in the end, we are also putting in the measures we need to ensure that we have the energy independence to get through this.
'And we are putting in more nuclear, and we are putting in more wind power. We have already seen a 26 per cent increase in British gas now from the North Sea.'
And Mr Johnson said that eventually energy bills will come down as Vladimir Putin's ability to 'exercise leverage over us and the rest of the world will diminish'.
The Prime Minister told broadcasters: 'I think that we will do everything we can to help.
'We want to make sure that we get people through the next few months, and we can, and we will because we took the right steps. We have a big, big package of help and support.
'But the message I want to get over to people is that I'm afraid that there's a global spike in energy costs driven by Putin's aggression in Ukraine.
'Putin's position, Putin's ability to blackmail, to exercise leverage over us and over the rest of the world will diminish week by week, month by month, and we will get through this and in the end, we will be in a much better position.
'The other side will have more of our own UK energy to rely on, and the bills will eventually come down.
But Sir Keir Starmer has said it is 'absolutely unforgivable' that the Government is 'missing in action' during the cost-of-living crisis. The Labour Party leader asked Mr Johnson 'where are you?'.
He told reporters: 'I do think the Government has to take responsibility in a situation like this.
'But on the cost of living crisis you've got a Prime Minister who insisted on staying in office, recognises there's a problem with energy prices, shrugs his shoulders and does nothing about it.
'You've got two leadership candidates who are fighting with each other about how appalling they have been in government, but neither has come up with any plan to deal with this problem. Unforgivable.'
Sir Keir added: 'My challenge for the Government is where are you? Join us in this challenge and do something about it because at the moment being missing in action is absolutely unforgivable.'
Sir Keir has also not ruled out Labour's £30 billion plan to tackle the cost of living needing to be adjusted to a higher amount.
The Labour Party leader was asked if his plan to freeze energy prices, unveiled last week, could more than triple in cost to £100billion if utility bills keep soaring into next spring.
He said: 'What we've got is a fully costed, comprehensive plan for this winter which will freeze those prices - that is welcome news to so many people who are worried sick today.'
But Sir Keir added: 'I accept that in April, May next year we need to look forward then to the proposals in place.
'That's why I've said, alongside our plan, we need medium and long-term solutions. We need to be much more self-sufficient when it comes to energy.'
Sir Keir reiterated his call, made a year ago, for a 'national mission to insulate homes'.
Miss Truss, the frontrunner in the Tory leadership contest, has insisted that she will 'ensure people get the support needed' in the coming months after the rise.
A Truss campaign spokesman said: 'Today's announcement will cause grave concern to many people across the UK who will be worried about paying their bills.
'As Prime Minister, Liz would ensure people get the support needed to get through these tough times. She will immediately take action to put more money back in people's pockets by cutting taxes and suspending green energy tariffs.
'This is on top of ongoing work such as the Energy Bills Support Scheme, which will see a £400 discount paid to consumers from October, and the £1,200 package of support for the most vulnerable.
'Liz will work flat-out to deliver long term energy affordability and security, unleashing more energy by maximising our North Sea oil and gas production - helping keep bills down in the future.'
And former chancellor Mr Sunak called surging energy bills the 'most pressing challenge' facing the UK.
'I've said that consistently, and as chancellor I announced significant support to help people. But the situation has deteriorated and as prime minister, I would go further.
'My priority is to protect the most vulnerable in society, including pensioners, and I want them to have certainty that extra help is coming - that is what I would put in place.
'Alternative plans, which are doing different things - borrowing tens of billions for permanent, unfunded tax cuts - don't actually do anything to help those most in need, risk making inflation worse and putting our nation's finances at risk as well.'
He said his plan was the 'right one' for the country.
Mr Sunak also said that protecting people from rising energy bills will be his 'immediate priority' as prime minister.
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UK gas prices are soaring after Russia began throttling off supplies to Europe, causing a global shortage as EU leaders scramble for supplies
Realtor attacks and yells racist slurs at Indian women
Jared Kushner says he believes he will live forever thanks to science
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Fiona the hippo meets her baby brother Fritz for the first time
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Bald eagle spotted going through TSA at North Carolina airport
Elderly woman dragged off plane by police after slapping steward
Shaquille O'Neal gets into a dance-off with Aussie comedians
Woman fights off fox after it attacks her in her own garden
Biden 'forgets' name of MTG after WH mocked her forgiven PPP loans
'It's not normal': Spain encourages women to swim topless in pools
Realtor attacks and yells racist slurs at Indian women
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Elderly woman dragged off plane by police after slapping steward
Shaquille O'Neal gets into a dance-off with Aussie comedians
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He said that people can judge him on his 'track record' as chancellor, pointing to the package of supports he announced for people to tackle the cost-of-living crisis.
Electric vehicle (EV) owners will be badly hit by the energy price cap rise, new analysis shows.
The RAC said the cost of a full charge at home for an EV with a 64-kilowatt hour battery - such as a Kia e-Niro - will be £33.80 under the new cap which comes into force on October 1.
That is compared with £18.37 under the current cap, and £13.69 for last winter's price limit.
The figures represent the cost when using a seven-kilowatt charger.
EVs have soared in popularity in recent months, ahead of the ban on sales of new petrol and diesel cars and vans in the UK from 2030.
Figures from the Society of Motor Manufacturers and Traders show there was a 50% increase in registrations of pure electric cars during the first seven months of the year compared with the same period in 2021.
RAC spokesman Rod Dennis said: 'The impact of the energy price cap increase will certainly be felt by drivers who charge their electric cars at home, with a full charge of a typical family-sized electric SUV costing 84% more from 1 October than it does under the current cap.
'Despite recent falls in the price of petrol and diesel, the cost of charging at home is still good value compared to paying for either fuel, but again underlines just how the rising cost of electricity is affecting so many areas of people's lives.
'We're also aware that public chargepoint operators are having no choice but to increase their prices to reflect the rising wholesale costs they're faced with, which will heavily impact drivers who have no choice other than to charge up away from home.
'The RAC continues to support the FairCharge's campaign for the Government to cut the VAT rate levied on electricity from public charge points to 5%, to mirror the rate charged on domestic electricity.'
Ben Nelmes, co-founder and head of policy at green consultancy New AutoMotive, said: 'Even with rising electricity prices, EVs will continue to be much cheaper to run than petrol or diesel cars.
'There are still great offers for EV electricity tariffs to further reduce the cost of charging.
'EVs can and should be part of the solution to the cost-of-living crisis.'
'It was acknowledged as being commensurate with the scale of the challenge, targeted at the people most in need,' Mr Sunak told broadcasters.
'That is my track record in grappling with this issue. I moved quickly as chancellor and this will be my immediate priority as prime minister and I'd like to try and do the same thing and make sure that we protect the most vulnerable as much as we can from this significant increase in bills.'
Ofgem's Mr Brearley told BBC Radio 4's Today programme he knew the increase in the cap would come as 'devastating' news for struggling households. He called on the Government and the next prime minister to take urgent action.
He said: 'I know this will be devastating for many families, when they hear how much their energy bills are going to go up. We have done and looked at everything we can do as a regulator to address this figure.
'There's a number of things we do to make sure that companies treat their vulnerable customers well. There's a number of vulnerability schemes that we run. But the truth is this is beyond the capacity of the regulator and the industry to address.
'So what we are saying today is, look we have 10 days now until we have a new administration, have a new prime minister and a new ministerial team. What I am clear about is the prime minister with his or her ministerial team will need to act urgently and decisively to address this.'
Mr Brearley also said the Government would need to add to the support it announced in May when bills were only expected to jump to £2,800.
'The Government support package is delivering help right now, but it's clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year,' he added.
'We are working with ministers, consumer groups and industry on a set of options for the incoming prime minister that will require urgent action.
'The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.'
He added: 'The price of energy has reached record levels driven by an aggressive economic act by the Russian state. They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.'
Mr Brearley also said that the gas price this winter was 15 times more than the cost two years ago.
He told BBC Breakfast: 'When I look at what... gas now costs this winter, it is 15 times the normal price that we were expected to pay two years ago.
'Now if that were happening in petrol, it would cost us £400 to £500 just to fill up our car. So because those costs are changing, the price needs to change and that's why the price cap is now changing to £3,549'.
When asked why Ofgem was not protecting the consumer by having a lower price cap, he said: 'The reason we don't have a lower price cap is because if the companies cannot recover the amount of money it costs for them to buy the energy, then ultimately, they will be unable to function.'
Friends of the Earth have revealed how badly different areas in England and Wales will be affected by the October cap rise
The big five oil companies - Shell, BP, Chevron, Exxon and TotalEnergies - made record profits of nearly $60billion last year
'They would have been unable to give us the energy that we need. So what the price cap does, and this is really important, it stops those companies charging excess profits over and above the cost of energy.
The energy price cap could top £7,000 next year, experts warned for the first time, as Ofgem announced the highest cap on record.
The energy regulator said that the price cap for the average household would increase by 80 per cent to £3,549 for the three months starting in October.
But experts at energy consultancy Auxilione warned that the cap could double even from that record high by April next year, hitting £7,263.
The price cap forecast by the consultancy Auxilione is shown
The prediction is based on the current cost of buying energy on global markets and also sees bills hitting £5,405 in January.
Fellow consultants at Cornwall Insight are a little more optimistic. Their model expects the cap to only reach £5,387 in January and then £6,616 from April.
Both consultancies then expect bills to fall by between £700 to £800 in July when compared to the April cap.
It is the grimmest forecast yet from the two outfits, whose predictions for October's price cap were close to Ofgem's decision.
Auxilione's final forecast was just £27 above what the cap was set at, while Cornwall Insight's prediction was £5 above.
The predictions are largely based on what gas prices are doing at the moment, so are subject to a lot of change between now and January, let alone before April.
'While there is still some time until the January and April caps are set, the energy crisis is showing no sign of abating,' said Dr Craig Lowrey, principal consultant at Cornwall Insight.
'A key focus for the next Prime Minister and for Ofgem must be protecting consumers, and the wider economy from the impact of this rise,' he added.
'There are several avenues that can be explored including a review and expansion of the current support package of at least £400 per household.
'However, all of these are temporary solutions and must be accompanied by a focus on implementing a viable long-term solution.'
He said that the purpose of the price cap is being undermined by the unprecedented rises in bills that are hitting households.
'Throughout the energy crisis, the Government and Ofgem have remained committed to the cap, and in its ability to shield consumers from a volatile energy market.
'However, the cap was never meant to be a permanent solution, it was created for a different energy market than the one we face today and has not protected consumers from what will be incredible hardship this winter.'
'But what it can not do is set a price that is less than the cost of the energy that we buy, and that's why we have to make the change that we are making today.'
Mr Brearley added that it was 'devastating news' for many families. He also said that 'there are no easy answers' to the energy crisis.
He told Good Morning Britain: 'Genuinely, there are no easy answers, but there are some big decisions that ultimately ministers will need to make.'
He added: 'To be honest I never imagined when I took this role that I would have to make an announcement that we made today.'
When asked about senior people in the energy industry receiving bonuses, he urged them to 'be thoughtful' about their pay and remuneration.
He said: 'For example, the senior Ofgem team has given away any bonuses to charity because we recognise the situation that we are in right now.'
The boss of Ofgem also said the regulator has had countless meetings with the current Government, and called on the next prime minister to take decisions to 'match the scale of the problem'.
'This is a major issue for the country next year. This is a major set of decisions that the new government will need to make, that the new prime minister and his or her ministerial team will need to make,' Mr Brearley said on a call with reporters.
He added: 'It's not for me to comment on the proposals that are out there for politicians. My point is very simple, it is going to need to be taken urgently and it's going to need to be decisive.
'And it's going to need to match the scale of the problem that we see - which version of that that the Government chooses to pursue really is a matter for them.'
The Confederation of British Industry said the scale of Government help needs to be 'urgently reviewed'.
'Government must also step up and deliver a national energy efficiency programme that will help reduce household bills as soon as this winter,' said Matthew Fell, the CBI's chief policy director.
And the trade body for energy suppliers in the UK has said the charges its members will be forced to pass onto households will be 'simply unaffordable', after Ofgem hiked the cap.
'This rise, while widely predicted, will be hugely worrying to customers. We know many customers are already struggling with energy bills and other costs and for millions of households, these latest increases will be simply unaffordable,' Energy UK's director of regulation Dan Alchin said.
'The rise is driven by the cost of buying gas on the wholesale market, which has been at record levels for about a year now - with prices this week 10 times what they were before the crisis.
'These costs are out of the control of energy retail suppliers who need to recoup them, otherwise we risk more going out of business in addition to the 30 that have done so since last August - causing huge cost and disruption to customers.
'However bills of this size were unimaginable a few months ago and we cannot expect customers to bear the brunt.
'Retail suppliers will continue to do all they can to offer help and support, especially to their most vulnerable customers, but faced with bill increases of this size and the numbers of customers who will need support, it won't be enough.
'The Government must step in urgently and put in place further support for this winter and with energy costs likely to remain high for the foreseeable future, look at ways to keep bills down next year as well - as we outlined in our letter to the Chancellor last week.'
Emma Pinchbeck, chief executive of Energy UK, said the new price cap will be 'really scary' for a lot of people and businesses across the country.
She told Sky News: 'This is a crisis that has been caused by the international gas market and so we need to tackle that at a systemic level, as well as making sure that people have urgent help right now.'
She added: 'We need something that is broad-brush that supports vulnerable people and really tackles what will be a massive cost-of-living crisis, but also something that helps middle income households and the wider economy.'
The price of petrol and energy bills has risen dramatically over the last year as inflation in the UK breaks through 13 per cent
Addressing politicians, she said: 'This is bigger than you think that it is. This is a whole-economy problem. This is urgent and we need to do more than you think that you need to do, and you need to do it now.'
By JASON GROVES FOR THE DAILY MAIL
Liz Truss today pledges 'immediate support' to help with soaring power bills if she becomes prime minister.
The price cap was raised to more than £3,500 per household today – almost treble the figure a year ago.
Analysts say bills could rise by a further £1,000 in January, with more pain in April as Vladimir Putin 'weaponises' his gas resources.
But writing in the Daily Mail, Miss Truss says she would use an emergency budget next month to 'ensure support is on its way to get through these tough times'.
Energy firms warn that millions of families may be unable to pay their bills this winter without government help. And business leaders predict that many firms will go under unless action is taken to rein in their exorbitant power costs.
Miss Truss and her rival for No 10, Rishi Sunak, have both pledged to continue a £15billion support package unveiled in June.
But the Foreign Secretary today indicates she will go significantly further to ease the squeeze on cash-strapped homes. She says Britain is facing 'extraordinarily difficult economic times', as a result of stagnant growth, high taxes and Russia 'using gas supply as a weapon'. But she claims she can 'chart a confident course through this economic storm' and stave off a recession with her tax-cutting agenda.
'The impact on our cost of living is clear at the supermarket checkout, at the petrol pump and on our latest energy bills,' she writes. 'I know how hard it is for millions of Britons, and how grave concerns are about the consequences of today's decision by Ofgem on the next energy price cap. The rest of Europe is facing the same challenge, which will loom large as winter sets in.
'If I am elected leader of the Conservative Party and prime minister, I will take decisive action on entering No 10 to provide immediate support, but will also tackle the root causes of these issues so we are never again in this difficult position. To those of you feeling the squeeze, my message is clear: I will ensure support is on its way and we get through these tough times.'
In today's article, Miss Truss says she will press ahead with her plan to slash taxes, with cuts expected to both national insurance and corporation tax in next month's 'fiscal event'.
And she stresses the need to push for growth and avoid a recession that would take a 'terrible toll'. Miss Truss has already pledged a suspension of green levies on energy, taking around £150 off bills.
She gives few details today of what additional help she is planning – or how much cash she is prepared to devote to the crisis – saying she has yet to see options being drawn up by the Treasury for the incoming prime minister.
Business Secretary Kwasi Kwarteng, who is tipped to be her chancellor, has held talks with energy bosses about a £100billion plan to freeze bills for two years. But insiders played down the prospect of it being approved.
Government sources said the Treasury was working up options for providing short-term help, allowing the new PM to 'hit the ground running'.
These include increases in the winter fuel allowance for pensioners, targeted help to those on low incomes through the Warm Homes Discount Scheme or a general rebate on energy bills.
Mr Sunak yesterday indicated he would offer further support to pensioners and low income households if he won, along with cutting VAT on energy bills.
But he warned against Miss Truss's plans for 'unfunded' tax cuts, saying that tackling inflation had to be the priority.
Mr Zahawi said Ministers were working to develop more options to support households amid the price cap rise.
'I know the energy price cap announcement this morning will cause stress and anxiety for many people, but help is coming with £400 off energy bills for all, the second instalment of a £650 payment for vulnerable households, and £300 for all pensioners,' he said.
'While Putin is driving up energy prices in revenge for our support of Ukraine's brave struggle for freedom, I am working flat out to develop options for further support.
'This will mean the incoming prime minister can hit the ground running and deliver support to those who need it most, as soon as possible.'
He also said the Government knows it has 'got to do more' to support households through the energy crisis. The Chancellor also indicated that the crisis would not be temporary, suggesting that it could last well into next year.
He said that help from the Government is coming but admitted: 'We know that's not enough. We've got to do more.'
'We need to make sure that this isn't a sticking plaster, that for the long term we continue to help the most vulnerable who have no cushion. And that's what I'm determined to do.
'And we're working up those options for both households and for business for the incoming prime minister on the 5th of September to take those decisions.
'So my message today is we'll get this £37 billion to people to help them for now, and then more will be coming because we know this will continue in January and of course on to April and next year and we have to remain resilient.'
He also said that his aim is to make sure vulnerable UK households are 'resilient through next year'.
The Chancellor declined to give specifics about what a package of funding might look like, but insisted that the Treasury was working on proposals to present to the next Prime Minister.
Mr Zahawi is not expected to retain his portfolio if frontrunner Miss Truss wins the contest to replace Boris Johnson.
'We know we need to do more because actually the most vulnerable households have no cushion, have nothing available to them,' he told broadcasters.
'So what I'm looking at is how I can target that help for those people, not just to January, but we need to make sure that we're resilient through next year.
'More help is on its way because we know that the most vulnerable households need that additional help. And I'm doing the work to make sure that that will be in place throughout next year.'
In addition, the Chancellor denied that there was a lack of action from Government amid the Tory leadership contest. It was put to him by broadcasters that it was 'intolerable' to 'leave people in the dark' at the moment.
Mr Zahawi said: 'That sounds like we're not acting on this.'
Setting out the work of his team over the last month, he said: 'We know (Vladimir) Putin has now worked out that actually this is quite a potent lever. You look at what's happening in Germany and the rest of Europe.
'We need to make sure there's more support. My preference is for it to be targeted.
'Why? Because it will give us a much longer, more leeway, to be able to face down Putin and send a very important message to him that this is not going to work.'
And the Chancellor suggested that the public does now need to look at how they use energy. Speaking to broadcasters, Mr Zahawi was asked if people should start reducing their energy use.
He said: 'The reality is that we should all look at our energy consumption. It is a difficult time. There is war on our continent.
'Very few people anticipated war. Wars happen in far-flung places. It is now here with us. We have to remain resilient. My responsibility is to deliver that help.'
On Wednesday, Mr Zahawi insisted 'nothing is off the table' when it comes energy bills, but added that a freeze in the price cap would not deliver 'targeted help' for those who need it most.
Liz Truss has pledged to hold an emergency budget if she becomes PM to help with the cost of living
Labour shadow chancellor Rachel Reeves tweeted today: 'This is incredibly worrying and will strike fear in the heart of many families. We cannot wait any longer to act.
Many households are facing the stark reality of being unable to afford their energy bills this winter.
Consumers are currently hearing a lot about options for handling their bills, ranging from asking for help from their supplier to refusing to pay at all.
Here we look at the pros and cons of each, and where to turn for advice and help.
The 'Don't Pay' group describes itself as 'a grassroots movement demanding a fair price for energy for everyone'. More than 100,000 people have signed up to support a pledge to cancel their direct debits if the Government and energy firms 'refuse to act' by October 1.
However, refusing to pay has serious consequences and households are strongly advised against taking this option - no matter how difficult their financial situation might be.
If you are on a pre-payment meter, failing to pay will mean your supply being cut off.
If you are on a regular or smart meter and you do not reach an agreement with your supplier before cancelling your direct debit, the firm may try to force you to have a pre-payment meter installed. This means you will have to pay for your energy usage upfront and a weekly payment to cover any debts - which can be as high as 90% of energy top-ups and 100% of electricity top-ups.
Pre-payment customers also pay more than others. The current energy price cap is £1,971 for households with a standard meter, but £46 higher at £2,017 for those on a pre-payment meter.
Failure to reach an agreement with your supplier may also result in them applying for a court warrant so they can visit your home and disconnect your energy supply. This can be done remotely if you have a smart meter, but your energy company must visit you to identify and assess your situation.
An Ofgem spokeswoman said: 'We know that people are under huge pressure, but we do not think it's in consumers' best interest to not pay their bills, and most leading charities and consumer groups agree.
'The knock-on effects of not paying bills can be huge for people. They could lose their direct debit discounts or be forced to move to a pre-payment meter. It could also damage their credit rating.'
- Moving off direct debits to paying for what you use - or a 'standing order'
As households' monthly direct debits soar by hundreds of pounds, many are considering stopping them and paying for the energy they actually use in three-month chunks in the form of a standing order.
While this may give a sense of control, anyone paying on receipt of a three-monthly bill for actual usage will pay considerably more than direct debit customers as almost all providers add a discount for direct debit payments.
Gillian Cooper, head of energy policy for Citizens Advice, said: 'Paying as you go can give you more control over the amount you pay, but you might pay more for that control. It's unlikely that you would save money by moving to pay-as-you-go, because you can't spread your costs over a year.'
- Direct debits remain the best option
Despite sickening increases, staying on a direct debit plan remains the most cost-effective option for paying for your energy.
However, customers have the right to challenge any increase that goes above the increased price cap - Ofgem is carefully monitoring this and has already warned firms that direct debits must be set correctly and they must 'clearly communicate any changes in a way that helps consumers understand their payments'.
- I'm really struggling, where can I turn?
You should first contact your supplier and notify them that you want to pay off your debt through a payment plan. They should discuss your options with you and come to an agreement.
When coming to an agreement, your supplier should consider what you can afford to pay based on your income, outgoings, and any other debts you have. They will also consider how much energy you are likely to use in the future by looking at your past usage.
To ensure your energy bill is accurate, send your supplier readings from your gas and electricity meter.
It is very important to resist, if at all possible, being moved on to a pre-payment meter as this is the least cost-effective way of paying for energy.
Rocio Concha, Which? director of policy and advocacy, said: 'We strongly encourage anyone concerned about being able to pay rising energy bills to speak to their supplier as energy firms have a duty to agree a payment plan that households can afford.
'Depending on the supplier, customers can ask for a review of their payments, a reduction in or break from their payments, more time to pay or access to hardship funds.'
'This is a national emergency. The Tories must freeze energy bills now so households don't pay a penny more in winter.'
She also said in a statement that the Government must choose between letting families suffer, or stop the oncoming rise.
'Today's announcement will strike fear in the heart of many families, and force many to make unthinkable choices this winter. The Tories now face an urgent choice.
'They can carry on letting oil and gas companies make huge profits whilst every family suffers with bills rising this winter. Or they can act now and stop the energy price cap rising, by bringing in a windfall tax on those oil and gas profits.
'People deserve a government that can meet the scale of this national emergency - not this spectacle of a Tory leadership race or a Prime Minister that put his out of office on months ago.
'Labour is on your side, and our fully-funded plan to freeze the price cap will make sure households don't pay a penny more this winter, saving you £1,000.
'Our mission for home grown renewable energy and to insulate 19 million homes will keep bills down for the long term too.'
Appearing on BBC Breakfast, Ms Reeves urged the Government to act to protect the public from soaring energy bills. She accused ministers of being nowhere to be seen on the morning of the announcement.
The Labour MP said people are 'worried sick' about what is happening and is 'striking fear in the hearts of families right across the country'. She called on the Government to freeze energy fills and follow Labour's own proposals.
She said: 'The fact that no Government minister is available to come on your programme today is just appalling. They are not here to give assurances they are not here to set out what they are going to do. That is a dereliction of duty.'
Liberal Democrat leader Sir Ed Davey said that rise in the cap is 'nothing short of a catastrophe' for millions of households.
'The only option is for energy prices to be frozen before these rises wreak havoc on our communities. Then we need a proper plan to be put in place to bring bills down next year,' he said.
'As millions suffer the Conservatives do nothing. No policy from the government, no plan from Liz Truss or Rishi Sunak. They have no idea how much pain these energy prices will cause our country. They are simply unfit to govern.'
Chairman of the Business, Energy and Industrial Strategy Committee, Darren Jones, also warned 'many businesses will face bankruptcy because there is no price cap on their energy bills'.
'The scale of the challenge will mean that the next chancellor will have to offer business grants and not just temporary tax and business rate cuts,' the Labour MP said.
Scotland's First Minister Nicola Sturgeon said the energy price cap rise is 'simply unaffordable for millions' and must be cancelled.
And Scotland's Energy Secretary Michael Matheson said the increase is 'unsustainable' and warned it would push millions into fuel poverty.
Ms Sturgeon said the rise should not be allowed to happen. She tweeted: 'This is simply unaffordable for millions. It cannot be allowed to go ahead.
'This rise must be cancelled, with the UK gov and energy companies then agreeing a package to fund the cost of a freeze over a longer period, coupled with fundamental reform of the energy market.'
Mr Matheson told BBC Radio Scotland's Good Morning Scotland programme households were already struggling with the cap increase in April this year, and that 'increasing it by another 80 per cent is simply unsustainable.'
He said: 'It will force quite literally millions of households into fuel poverty and extreme fuel poverty and is unsustainable.'
In a statement issued after the increase was confirmed today, Mr Matheson called on the UK Government to act.
He said: 'Today's price cap announcement and increase imposes a burden that customers simply cannot be expected to carry.
'The only acceptable course of action now is for the UK Government, who have the necessary policy levers and borrowing powers at their disposal, to take immediate steps to cancel the increase for all households.'
Mr Matheson added: 'No single government, company or organisation can solve this crisis alone. It requires a collective response commensurate to the situation.
'We will continue to work with our partners, energy companies and stakeholders to do everything we can to help the people of Scotland through this deeply unsettling time.
'We will also continue to press the UK Government to reform the energy market to prevent this situation occurring again in the future.'
Mr Matheson said the Scottish Government is treating the situation as a 'public emergency' and has prepared a £1.2 million package to enable the immediate expansion of energy advice services.
Scottish Labour leader Anas Sarwar and Scottish Liberal Democrat leader Alex Cole-Hamilton called for energy prices to be frozen.
Mr Sarwar said: 'This eye-watering price hike risks plunging millions of people into fuel poverty. This is a national emergency and our governments have a moral duty to act.'
Scottish Liberal Democrat leader Alex Cole-Hamilton MSP said: 'This energy price rise will be devastating for hundreds of thousands of Scottish families and pensioners already struggling to make ends meet.'
ScottishPower chief executive Keith Anderson, said: 'The size and scale of this issue is truly catastrophic for UK households and that's why only a big solution can tackle it once and for all to shelter people from the worst this winter.
'We have offered the Government a plan, backed by the industry, that can be delivered this year, tailored in line with their priorities and will support the UK economy - with the cap set at £3,549, what billpayers need now is to hear what additional help is coming.'
Rishi Sunak has also pledged measures to help with the cost of living, and will continue packages of support already introduced
Richard Neudegg, director of regulation at Uswitch.com, said: 'Here is the signal that the summer holidays are over. After seemingly endless predictions, the true magnitude of the October energy price cap is now clear.
'Ofgem has rubber-stamped the letters from suppliers that will now start landing on millions of doorsteps informing customers of exactly how much they'll need to pay for their energy as we go into winter.
Millions of hard-up families could save hundreds of pounds on their energy bills this winter in a few simple steps without making their homes any colder, experts have said.
Record-breaking energy prices are likely to affect many over the next few months as Ofgem hiked its energy price cap today. Experts warn that worse is to come when the cap is updated in January.
But two small changes to the way your boiler works could save up to 18 per cent, or around £324, according to experts at the Heating Hub, which provides advice on energy efficiency.
- Turning down your flow temperature
The flow temperature on a boiler regulates how hot the water is when it leaves the boiler to go to your radiators. Most condensing combi boilers in the UK are still set to their factory setting, which tends to be around 80C, but at this temperature boilers cannot operate at their most efficient.
When a condensing boiler burns gas, a lot of the heat can escape out of the flue and out on to the street - this heat literally disappears into thin air. Steam coming out of a flue is a sign that flow temperature is high and heat is escaping.
At lower temperatures the boiler works to recycle a lot of this heat back into the water it is trying to warm up.
Jo Alsop of the Heating Hub said that by turning down the flow temperature, households could save around 6% to 8% of their annual gas usage. 'It's worth making the point that condensing boilers, even though they're A-rated on the box (for efficiency), they don't necessarily achieve A-rating in the home,' she said.
Some A-rated boilers have been found to operate at E-rated efficiency levels in the home, at just 75 per cent.
Turning down the flow temperature is not the same as turning down the thermostat. The boiler and radiators will still work to keep rooms at the same temperature as before, but it might take a little longer for the house to heat up.
Ms Alsop said families should experiment with lowering the flow temperature. The colder it is, the more efficient the boiler will run. 'We would advise to do that to around 60C and if they find that's a bit too cool on a very cold day, they can always notch it back up, but importantly reduce it down again when the weather gets a bit warmer, and keep reducing it down,' she said.
How to do this depends on the boiler, but it is a fairly simple process. It should say how in the boiler manual, which can often be found online. The Heating Hub also has a guide on its website on how to change the flow temperature.
It is important to remember only to do this if you have a condensing combi boiler which is not connected to a hot water cylinder. Also be careful about keeping rooms cold if you have vulnerable people in the home. Several energy suppliers are also keen for households to turn down flow temperatures.
Rebecca Dibb-Simkin, chief product officer at Octopus Energy, said: 'Safely turning down the water flow temperature of your gas boiler is a little-known but very effective tip for saving gas whilst staying warm, and could save people up to 8% off their gas bills.
'Over 100,000 of our customers who took part in our energy efficiency scheme last winter told us they tried it, with some of them knocking nearly £100 off their bills.'
- Turning off your boiler's pre-heat function
The pre-heat function on a boiler is designed to ensure that hot water is ready to flow to the taps at a moment's notice. It means the boiler always keeps a small amount of water hot.
It is a handy function when you want to wash your hands and do not want to wait for water to heat up, but the boiler is heating up water when you do not need it.
'If the boiler is not on and heating the home, it will fire anyway, just to keep that water at temperature, even if someone is not home during the day, and certainly it will fire all through the night, even when hot water is not in demand,' Ms Alsop said.
That means burning gas through the night, every night, for nothing. Turning off the pre-heat function might mean a longer wait for the shower to get warm in the morning, but it is a small inconvenience for the hundreds of pounds that can be saved.
Ms Alsop estimates households could save around 5 per cent to 10 per cent of their gas use. Guides on how to turn off the pre-heat function should be in the boiler manual or online.
However Ms Alsop said people should consider turning the pre-heat on during droughts if they have to wait an exceptionally long time for hot water to reach the taps. They can still turn it off during the day and night.
'Households will face average monthly charges of £362 based on expected usage - almost three times more than the same period in 2021.
'Even after the £66 monthly discount currently on the table from the Government, families will need to find on average an extra £169 per month compared to last year, when many household budgets are already maxed out.
'The energy crisis we face this winter must never be allowed to happen again. This is a failure of the wholesale market and, until that is resolved, we won't have a long-term solution.
'The Government has made it clear that it will not intervene further until a new Prime Minister is confirmed. As concerning as this is, there does seem to be consensus that more support will be made available, but it remains to be seen if it will be enough.
'Until the Government acts, which we expect will be in the coming weeks, consumers are being held in a cost-of-living limbo.'
The next prime minister will most likely be unable to avoid introducing a fresh package of support, a leading think tank has said.
Respected think tank the Institute for Fiscal Studies suggested on Friday that whoever becomes the next prime minister would be unable to avoid putting together a 'substantial package of support', no matter what is said on the campaign trail.
The new rise in the price cap, the IFS said, means the current Government supports will cover only 47 per cent of the rise in bills.
It said covering the same proportion of the energy price rise now would cost a further £14 billion.
The IFS said it was difficult to assess the impact of Ms Truss's plans to cut green levies.
'Cutting only those levies that still add to bills would be complex as they are linked to various schemes and subsidies and apply to business as well as households, but would save households around £50 on average over the three months from October,' the think tank said.
Mr Sunak's plan to cut VAT on household energy bills, the IFS said, would save a typical household £51 between October and December at a cost of £1.4 billion.
'Looking beyond this winter, energy prices also look like they will remain very high well into next year, which will put pressure on the government to provide further support in the coming months,' IFS economist Isaac Delestre said.
'Whoever becomes the next prime minister will most likely be announcing a substantial package of support very soon after taking office.'
In Scotland, the £2million Social Housing Fuel Support Fund, administered by the Scottish Federation of Housing Associations, will open on Monday to provide help to the most vulnerable households.
Citizens Advice Scotland also said the increase should not be allowed to happen.
The charity's chief executive, Derek Mitchell, said: 'This increase should not go ahead. It is absolutely horrifying for people who are hanging on by a thread financially.'
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: 'Today's Ofgem price hike is like a dagger to the heart of millions of people up and down the country.
'As a result of the decision, parents will be unable to feed their children, the sick and elderly will be condemned to worsening health, disabled people will go without vital medical equipment and households will be forced into poverty for the first time in generations.
'All the solutions lie at the Westminster Government's door, yet it is silent in the face of this looming disaster.'
And Andrew Forsey, national director of anti-hunger charity Feeding Britain, said: 'Unless significant additional help is offered by the new prime minister, these eye-watering prices will spring a vicious hunger trap; leaving millions of families unable to afford heating or eating.
'Eighty years after the Beveridge Report set the framework for a welfare state that could eliminate destitution from our shores, the threat of destitution now hangs over us again like the Sword of Damocles.'
Meanwhile Sara Ogilvie, policy director at Child Poverty Action Group, said: 'Today's energy cap announcement will terrify many low-income families. Their budgets have been overstretched for months, and soaring prices will make it practically impossible to escape the tightening grip of poverty.
'We know that families with children spend 30 per cent more on energy bills than households without kids - yet Government has completely failed to recognise the extra costs facing households with children.
'The next prime minister will be on a collision course with reality unless they increase support to reflect the scale of need, and uprate benefits in line with inflation.'
And a charity which supports the vulnerable said families are facing one of the 'bleakest Christmases' for years.
Rossanna Trudgian, head of campaigns and public affairs at Action for Children, said: 'Today's announcement, and warnings of even worse rises to come next year, makes it clear that the country is facing a national emergency.
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'The families we support are already under enormous pressure and are now set to face a relentless wave of energy price hikes and inflation all while coping with the colder weather.
The rising cost of living is placing increasing pressure on household budgets, but there are a number of pieces of technology which could help people make some vital savings. Here is a look at some of the tech which could make a difference.
Getting a smart meter is a key step in making your home more energy efficient, as it can help bring an end to the use of estimated bills and give users an insight into how much energy they are using and which appliances use the most - giving an incentive to change some usage habits.
Smart meters enable both users and energy suppliers to track the energy consumption of a home, making it possible to more easily understand when a home uses more energy and how it could become more efficient, and potentially highlight where a household could switch to a cheaper tariff based on their usage.
Given the increased connectivity in many homes today thanks to the rise of smart devices, it is now also possible to control many appliances and other items from a smartphone.
A number of apps enable users to set routines to turn connected appliances and electronics on and off at certain times, a feature which could be used to improve efficiency and save money.
The major smart home apps from the likes of Apple, Amazon and Google all offer their own variations of these tools - depending on which smart home devices a household already has.
Another app worth noting is Samsung's SmartThings - which is available on both Android and iOS - and enables users to not only connect to and control appliances and other devices from a range of brands, but also has the ability to connect to the home's smart meter and allow energy consumption and costs tracking from a user's smartphone.
Beyond trying to make savings just on energy bills, there are a number of apps and online tools that can help people better track their spending and budget more generally each month.
Online banks such as Monzo and others send notifications to a user's phone every time money is spent, but also allow users to organise money into different 'pots' and see breakdowns of what they are spending money on each month to help with budgeting.
For those who do not use an online or app-based bank, there is a range of budgeting apps available such as Emma or Snoop Finance's Budget Planner which can be connected to bank accounts to help track spending and set monthly budgets.
Some of these apps also offer tips and guidance on better money-saving, and can even flag cheaper deals for certain services when they become available.
However, be aware that while many of these apps are initially free to download and use, some charge a subscription fee for some features.
Staying online is vital for many people for school or work, but also to access vital online public services, as well as staying in touch with friends and family, but is becoming increasingly difficult for many as the cost of living rises.
Some broadband and mobile phone providers have begun to introduce what are known as social tariffs - cheaper connectivity deals for lower-income households and those receiving universal credit, with more likely to be rolled out in the coming months.
In addition, the charity Good Things Foundation is working with Virgin Media O2, Vodafone and Three to provide free mobile data to people via The National Databank.
The scheme provides free mobile data, texts and calls to people in need, and works in a similar fashion as a foodbank, but for internet connectivity data.
Local community partners within the Good Things Foundation's network can apply to access the databank, enabling them to provide free data to those in their communities who need it.
'We are seeing more and more frightened families who are reaching crisis point.
'Some parents are coming to us in tears, terrified about how they are going to feed their children, with some missing rent payments so their child can have a meal - one family has even resorted to taking seats out of their car to save on fuel. Many of these families have already cut back to the bone and have nowhere left to cut.'
'They are facing one of the bleakest Christmases in recent years. The next prime minister must provide emergency relief to struggling parents by committing to further targeted support for low-income families through the social security system.
'Families with children also face higher costs, so it is vital that any financial support takes into account family size and need.'
The StepChange debt charity said a third of its new clients were in energy arrears in July, before the latest rise, and this could rise to more than half after the next price cap increase in January.
Chief executive Phil Andrew said: 'Household budgets are being pushed to the absolute limit and it's inevitable this will lead to more people experiencing debt.
'The demand for debt advice is rising across the sector as the cost-of-living crisis bites.
'Many of our existing clients are also having to amend their arrangements as they can no longer afford their previous payments.'
And Mike Childs, head of science, policy and research at Friends of the Earth, said: 'Today's news will be life-changing for millions of people.
'The government, and the two frontrunners to be Prime Minister, have had all summer to set out how they'll shield households from these colossal price hikes, yet we still don't have a credible plan.
'Decision-makers must urgently commit to much greater levels of emergency financial support and the rapid roll-out of a nationwide, street-by-street home insulation programme targeted at those who need it most.
'There are almost 5 million homes in England and Wales that lack even the most basic insulation measures, meaning too many households are paying through the roof to heat their homes.
'At this stage there's no justifying the total absence of plans to improve the energy efficiency of UK homes, when it would help to slash energy use, reduce climate-changing emissions, and save households hundreds of pounds each year on their bills.'
Becca Lyon, head of child poverty at Save the Children, called the price cap rise 'a full-blown economic crisis for thousands of families'.
She said: 'Children are at serious risk from today's announcement and could spend this winter in cold homes, with fewer hot meals, despite the best efforts of their parents and carers. Our children deserve better.
'Families are already squeezed to the limit and while facing increased energy costs, they could also be paying £1,000 a month or more on childcare, even with Government help.
'Parents want to do their best for their children but how can they when they're facing costs per month that come to more than their incomes? Debt and hardship are the only likely outcome from today's price cap rise.'
Disabled people 'feel like they are being punished for using more energy', the disability equality charity Scope warned.
Policy manager Tom Marsland said: 'After months of harrowing predictions about energy bills, today's announcement confirms disabled people's fears. Life already costs more for disabled people.
'Now the cost of charging a wheelchair or using a breathing machine will have almost trebled in a year. We've been inundated with calls from disabled people who don't know which way to turn and feel like they are being punished for using more energy.
'The government must intervene now. They should start by doubling the support package, and look at bringing in discounted tariffs for disabled customers who need more energy.'
Matthew Reed, chief executive of end-of-life care charity Marie Curie, said: 'Terminally ill people could freeze to death this winter without further support.
'The need to stay warm to keep pain at bay and power specialist medical equipment means that energy bills for some terminally ill people will be thousands of pounds higher than the average household.
'Many won't be able to afford this. With 30% of excess winter deaths attributable to cold, damp housing, this could cost lives.
'Our research shows that working age people are at a huge risk of falling into poverty after a terminal diagnosis. They often have to give up work.
'They don't qualify for their state pension. They cannot claim Winter Fuel Payments and do not automatically qualify for the Warm Home Discount scheme either.
- First step: switch off and unplug
Households should by now have done a complete check of every power outlet, unplugging anything that is not necessary and turning devices off standby mode - and getting into the habit of doing this regularly.
Energy Saving Trust calculates that you can save around £55 a year just by remembering to turn your appliances off standby mode.
Almost all electrical appliances can be turned off at the plug without upsetting their programming. You may want to think about getting a standby saver or smart plug which allows you to turn all your appliances off standby in one go.
Check the instructions for any appliances you're not sure about. Some satellite and digital TV recorders may need to be left plugged in so they can keep track of any programmes you want to record.
A recent report by the Heating and Hot Water Council found that households can save around 6% to 8% on their gas bill just by turning down the heating flow temperature on their condensing combi boiler.
Doing this will allow the boiler to run more efficiently and could save around £200 off an average energy bill.
Use the controls on the front of your boiler - not your room thermostat - to set the flow temperature for the boiler, which is the temperature your boiler heats the water to before sending it off to your radiators. The way you adjust the flow temperature and the display information available varies a great deal. There is a handy online guide at theheatinghub.co.uk.
Another easy saving is to turn off the pre-heat mode on the boiler, which could mean hot water taps taking longer to heat up, but could save hundreds of pounds a year.
- Forget about your tumble dryer and use other appliances wisely
Tumble dryers are massive energy drains, so on warm days hang clothes outside to dry instead and invest in a drying rack for cooler months.
Use your washing machine on a 30C cycle and reduce use by one run a week. Only run your dishwasher when it is full and use eco settings if possible.
Avoid overfilling the kettle - only boil the amount you need.
- Defrost your fridge and freezer
Remember to regularly defrost your fridge and freezer, as the more they ice up the more energy they will use.
A full freezer is more economical to run. With a full freezer, the cold air does not need to circulate as much, so less power is needed. If you have lots of free space, half-fill plastic bottles with water and use these to fill gaps.
BBC Good Food suggests you fill the freezer with everyday items you are bound to use, such as sliced bread, milk or frozen peas.
Turn lights off when you are not using them or when you leave a room.
Replacing all the lights in your home with LED bulbs could help you save even more.
- Keep windows closed when temperatures get hot
The obvious thing to do when homes warm up is to open all the windows. However all this does is fill the house with hot air.
It is best to use blinds and curtains to block direct sunlight during the day and then open the windows at night when temperatures drop, helping you to save energy by reducing the need for power-hungry fans.
- Use fans sparingly and wisely
Fans, even when used on cooling settings, will send bills soaring. You should not stop using them when necessary, but there are ways of maximising their effect and cutting the time they are switched on.
Putting fans at floor level helps to circulate the lower cold air rather than the warmer air that naturally rises in a room. You can also create the ideal combination for energy saving by pairing smart fan usage with closed windows, keeping the fans working during the day and the windows open at night.
New analysis by the Energy and Climate Intelligence Unit has found homes rated band F on the Energy Performance Certificate (EPC) system, a measure of the home's efficiency, are set to have a gas bill £968 higher than a home rated EPC band C, the Government's target for 2035.
The average home in the UK is rated band D and these homes will pay £420 more for their gas this winter, compared with band C.
Energy Saving Trust also says that for those wishing to future-proof their homes, investing in professional draught-proofing and insulation in preparation for the winter months could lead to a reduction in bills by £405 for a semi-detached home. DIY draught-proofing is much cheaper and anything is better than nothing.
Installing solar panels for a similar property could lead to additional annual savings of around £450.
A quarter of heat in an uninsulated home is lost through the roof. Most homes have at least some loft insulation but often not enough. Topping up from 120mm to at least 270mm of insulation will help.
- And here are some myths...
Turning boilers off is not advisable or an effective way to save energy. Instead, thermostats and timers should be used effectively to regulate their operation.
Fridges and freezers are designed to be kept on all the time and energy will not be saved by turning them off for short periods because more energy will be used to cool them down again when turned back on. There are also important safety issues that can arise if food partially defrosts before it is prepared for eating.
'Dying people are falling through the cracks. They need targeted Government support now.'
Thomas Lawson, chief executive of national poverty Turn2us, said the 'meteoric rise' will be crippling. He said: 'This is no longer a choice between heating and eating, but not being able to afford either.
'This is as big an emergency as the impact of Covid and needs a similarly confident Government response. As one of the wealthiest economies, it's simply not acceptable to consign more than a quarter of us into poverty.
'We implore the Government to act with urgency and introduce a cap on energy costs that means that we can heat our homes and turn on the lights as we head into winter.'
Rethink Mental Illness called the news of the cap rise a 'hammer blow' to households across the country.
Alexa Knight, its associate director for policy and practice, said: 'Mental health and money worries are intrinsically linked, and we urgently need a clear response from Government to an economic crisis that has the potential to fuel a mental health emergency.
'There is a growing feeling of powerlessness which will not subside until we see concrete plans from the Government about how they will provide targeted support through the difficult months ahead.
'With mental health services already facing record demand, we need more than a recognition of the problem.
'We need urgent action to address the gravity of the situation people are facing. This cannot arrive a minute too soon.'
The Trades Union Congress has said energy bills will rise 35 times faster than wages and 57 times faster than benefits in the last three months of this year, after the energy price cap was hiked by 80 per cent.
It added that while average nominal wages will rise by £1,470 in the year to October, energy bills will soar by £2,270 in the same period, leaving workers £800 worse off.
'Nobody should have to worry about heating their homes this winter,' said TUC General Secretary Frances O'Grady. 'But millions are facing bankrupting bills in the months ahead.
'Today's energy price rise will be a hammer blow to family budgets and tip many households into fuel poverty. Ministers must immediately cancel this catastrophic increase.
'This is the worst possible time for the government to go missing in action. And to make sure energy remains affordable to everyone, they should bring the energy retail companies into public ownership.'
Sharon Graham, the general secretary of trade union Unite, said that the fuel crisis is set to become worse for workers after the energy price was set 80 per cent higher.
'We know now that rampant corporate profiteering is at the very heart of our soaring energy bills and Ofgem's soaring price cap.
'Until this corporate looting of our energy networks is confronted, the fuel crisis will become more and more perilous for workers and their families.'
And Katie Schmuecker, principal policy adviser for the Joseph Rowntree Foundation, said households are 'crying out for certainty and security'.
She said: 'It is simply unthinkable that the price rises announced today can go ahead without further Government intervention on a significant scale.
'To force the burden of rising wholesale energy prices onto households will plunge many into destitution.
'Millions more will face the threat of bills they simply cannot pay, homes they cannot heat and stomachs they cannot fill. It is the job of Government to decide how the burden is fairly shared between families, businesses and the public finances.
'Whoever occupies Number 10 next will be remembered for who they protect - they must make sure energy doesn't become a luxury only the wealthy can afford.'
Energy consultants warned households could see their fuel bills cost more than their monthly mortgage payments next year as energy prices skyrocket.
Many people are set to see their disposable incomes shrink significantly in the new year with some seeing the cost of their utility bills catching up with, or overtaking, their mortgage.
Energy prices could spike at as much as £6,823 per year for the average household from next April, according to the latest forecast by energy consultancy Auxilion, which amounts to about £569 a month.
In comparison, the average bill in October 2021 was £1,400 a year.
Homeowners with fixed-rate mortgages pay £741 a month on average, according to the latest data from trade body UK Finance, compiled in December.
That means homeowners could see just a £172 difference in the cost of paying their mortgage and heating their home. For those with a standard variable rate (SVR) mortgage, the figures are even starker.
The average SVR mortgage monthly repayment, which borrowers can be transferred to once their fixed or tracker mortgage deal comes to an end, amounts to £516, UK Finance said.
That means that some households could end up paying £53 more on their utility bills than their mortgage as runaway energy prices overtake the cost of owning a home.
Meanwhile, people tied to a tracker mortgage, which directly track the Bank of England's base rate, will see around £50 added to their typical costs, according to calculations by the trade body.
And renters are set to face even more drastic mounting costs amid the cost-of-living crisis.
Rents have spiralled over the past few years and the average monthly cost of a newly let property reached £1,166 in July, or £2,008 for Greater London, according to figures from estate agents Hamptons.
Such rapid price growth means that the average two-bed home, at £1,068pcm, now costs what the average three-bed cost just 16 months ago. While the average one-bed, at £929pcm, is now worth what the average two-bed cost two years ago, Hamptons said.
The combined effect of higher mortgage repayments or monthly rent and surging bills could put some people under serious financial pressure in the months ahead.
Several high street banks have set aside hundreds of millions of pounds to prepare for an increase in customers defaulting on their loan repayments.
Households and businesses have been warned that the 'era of cheap energy is over', after energy regulator Ofgem hiked bills today.
The UK is going to see gas prices remain high over the next few years, even if some of the current extreme costs ease off, said Nathan Piper, an oil and gas analyst at Investec.
As Europe severs ties with Russia, the UK is going to become increasingly reliant on liquified natural gas (LNG), which is transported around the world on ships, he said. This is naturally more expensive than gas piped across continents, and will mean prices stay well above the historical average.
In the 10 years before the current gas crisis, prices averaged around 50p per therm, a popular unit of measurement. Now it stands closer to £6, a 12-fold increase.
'The crazy thing is we are experiencing record UK gas prices at the moment, in the middle of summer, which just doesn't normally happen,' Mr Piper said.
He said that if you want to buy your gas in advance for 2025 at the moment you are still going to pay several times more than in the past. Data from the Intercontinental Exchange shows that gas prices for the winter of 2024 and 2025 is trading at nearly 420p.
'For the UK, in particular, we are going to be more and more reliant upon LNG imports to satisfy our gas demand. And as a consequence, we will have to get used to higher gas prices into the long term,' Mr Piper said.
'I think we have to accept that we'll have to endure much higher gas prices than we've been to. And the era of cheap energy is over.'
For households this will mean incredible pain this winter which is unlikely to subside for years to come. The sheer longevity of the increase is the perhaps the most unusual part of this crisis.
'You occasionally get gas price spikes. So for a very short duration, because you get a cold snap, Beast from the East, whatever it is, you get short-lived spikes in gas prices, and everyone goes 'goodness me, look at that',' Mr Piper said.
But afterwards things used to quickly return to normal. This is not what is happening now. Prices were already rising before Russia invaded Ukraine, but since then the situation has worsened.
Problems in France's nuclear plants have also pushed up the price of electricity, a hot dry summer has reduced power production from Norway's rivers, and low water levels on the Rhine have made it harder to transport coal in Germany.
Asked what else could go wrong, Mr Piper said that LNG terminals might break down, and Russia could cut off its remaining gas flows to Europe.
'What we're relying upon is that all the LNG terminals are able to produce gas,' he said. 'A lot of these terminals are running almost at maximum capacity. And if you run anything at maximum capacity, there is the issue that it could break down. The other thing is that the Russians could shut off the Nord Stream 1 pipeline completely.'
Gas prices spiked earlier this week after Gazprom announced it would shut the pipe for three days of maintenance next week.
'The question mark is will they turn it back on,' Mr Piper said. What happens next remains to be seen.
'Blackouts will be avoided by what economists call demand destruction, where businesses and people cut their usage because they can't afford to keep it up.
'Heavy industry across Germany across Europe elsewhere, is effectively shutting down because they can't secure gas or electricity prices at anything like a competitive level over the next two or three years,' he said.
'If it was a spike, you'd go 'oh this is terrible, but actually we can lock in competitive prices for the next two years and we can still produce fertiliser, cement, glass, whatever, at an economic price'.'
In comparison, US manufacturers are seeing much higher prices, but still far below what Europe is seeing, making them more competitive than European counterparts.
Lloyds Banking Group said it had put aside £377 million to cover loan losses, while Barclays reported it set aside £341 million in July as the economic outlook worsened.
Charities have warned that many people could face hardship during the colder months of the year when they may be forced to choose between 'eating or heating'.
Citizens Advice said that a quarter of people in the UK will not be able to afford to pay their energy bills in October based on current forecasts, jumping to a third of people in January when prices will soar higher.
It said its analysis took into account the energy rebate and cost-of-living payments offered by the Government, showing that the support on offer does not go far enough to protect households from spiralling costs.
Dame Clare Moriarty, chief executive of Citizens Advice, said: 'Every single day at Citizens Advice we're already helping people in the most heart-breaking circumstances, trying to scrape together enough to feed their kids and keep the lights on. This will get far, far worse unless the Government acts.
'It's becoming increasingly clear that skyrocketing prices will swallow up all of the help that has been announced so far.'
Furthermore, disability charity Scope said that disabled people are likely to be harder hit when October's energy price hikes come into force.
'Scope has been inundated with calls from disabled people who have been forced to make dire cutbacks on personal care, hygiene, food and energy because of rampaging inflation,' said Tom Marsland, policy manager at Scope.
'This is having a devastating impact on disabled people's lives, and the support from Government just won't touch the side.'
Scope said it had heard from people who are forced to stop heating their homes to power lifesaving equipment and others who are skipping meals so their children can eat, the charity said.
It also noted that referrals to its disability energy support service had increased five-fold between February and July, compared to the same period last year, partly because of rising costs.
Meanwhile Miss Truss is set to end the ban on fracking as part of a plan to make the UK an 'energy-secure dynamo'.
The Foreign Secretary said Britain cannot be 'held hostage' by authoritarian regimes and must end its reliance on foreign imports within a decade.
She pledged to win the support of local communities for fracking by 'ensuring' they see the benefits, and said new projects will only go ahead if there is a 'clear public consensus' in their favour.
It came as one fracking company in the North of England claimed, in a letter to the Treasury, that it would be likely to be able to inject shale gas into the energy market by January if it were granted a licence immediately.
Writing in today's Daily Mail, Miss Truss said: 'In a world where authoritarian regimes are willing to weaponise energy, we cannot afford to be held hostage...
'We do not rely on Russian gas, unlike our European allies, but no country is safe from malign efforts to push up energy prices. Energy security starts at home, which is why we must radically boost our domestic supplies.
'We will end the effective ban on extracting our huge reserves of shale gas by fracking but be led by science, setting out a plan to ensure communities benefit. Fracking will only take place in areas with a clear public consensus behind it.'
The comments suggest she will go considerably further than previous Tory administrations to win over local communities.
Boris Johnson placed a moratorium on fracking in 2019 after widespread opposition from the public, and concerns over earthquakes.
YouGov polling recently found 53 per cent of Britons would support fracking if it meant a reduction in bills for people in the community.
Miss Truss also today states her support for nuclear power, citing small modular reactors made by Rolls-Royce, and promises to 'champion renewables such as wind and tidal'.
She concluded: 'This is why I believe our great country can become over the next decade an energy-secure dynamo, which could be powering Europe as a net energy secure exporter.'
Her comments came as Mr Zahawi held meetings with nuclear and renewable energy producers to discuss how Britain can reduce its reliance on international markets.
Treasury officials have put a menu of options together for the new prime minister, including a recommendation to re-start fracking to secure the nation's energy security.
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The new 'three winter' plan aims to bring down energy bills between now and 2025. A Treasury source told The Daily Telegraph: 'The third winter is about increasing our general energy supply through things like North Sea drilling, more nuclear, more renewable, more wind.'
Support for fracking has grown as soaring gas prices have hit household budgets, with Tory members voicing their support for new drillings in leadership hustings.
A mining engineer, speaking at the hustings in Manchester, said: 'You cannot run, you cannot grow, you cannot progress a modern economy without a secure supply of cheap, abundant, readily available energy. Right below our feet is the largest energy bonanza this country has ever discovered, bigger than coal and bigger than the North Sea.'
Fracking involves injecting a mixture of water, sand and chemicals at high pressure into boreholes a mile underground to fracture the rock and release gas or oil.
A Treasury source said: 'The Chancellor wants to see a proper cost-benefit analysis of fracking, with safety and the environment taken in as considerations.
'Energy bills are rising... and we need to look at everything on our disposal.'
Fracking started in Lancashire at two sites run by Cuadrilla in 2010, but the Government imposed a seven-year moratorium in 2011 because of tremors.
When the sites reopened, they were met with protests from locals and groups including Extinction Rebellion. In November 2019, the Government announced a moratorium, citing a report that found current technology could not predict the likelihood of tremors.
** Are you going to struggle with energy bills this winter? Please email: james.robinson@mailonline.co.uk **
Here is a selection of thoughts from Britons around the country about the latest energy price cap rise which will send the average household's yearly bill from £1,971 now to £3,549 from October:
Esme Marshwitch - Alton, Hampshire
(glass worker at The Glassy Witch)
'This is nothing short of catastrophic, which in fairness, I am rather resigned to due to our government. Calling it a 'cap' is laughable. Just as when University fees came in, as soon as they were allowed to charge 'up to 9k' per year, whoosh! Up they ALL went. Meddling in the prices levied by the energy companies is what has brought us to these spikes in the first place. I fear for the winter, and how many more will suffer from lack of food, or heat. And I don't know what the answer is. Maybe heavy investment in renewables, and retaining public ownership of such ventures, rather than selling off to some venture capitalist somewhere might be an idea? Won't do much right now, but it would at least be the start of a push that ought to have started in the Thatcher years, rather than chasing the next commodity sell off.'
Lee Chambers - Preston, Lancashire
(psychologist for Essentialise Workplace Wellbeing)
'We are in for a winter of discontent with both businesses and consumers backed into a corner with a necessity more than doubling in price. This isn't an incremental rise, it's more like a volcano erupting. This will skittle some businesses that simply can't absorb the costs, and sadly they will be the same small businesses that were neglected during the pandemic. We have to look at why so much pressure has built in the system. But more than anything, I'm concerned about the mental toll and distress this will cause, as it's not as easy to measure as a price cap but in our work it's already becoming a priority concern and stressor for people struggling from a variety of walks of life. Energy bills don't discriminate.'
Jackie Mulligan - Shipley, West Yorkshire
(founder of local shopping platform ShopAppy)
'This latest energy price cap increase will pummel small businesses and the people who run them up and down the country. Many are already at breaking point after two years of the pandemic, with a significant percentage now paying off the Government-backed loans they had to take out to survive. Unless the Government acts soon and acts decisively, many small businesses, which are the beating heart of our communities, will struggle to survive. The UK economy is on red alert and millions of small family-run businesses are facing an existential threat from rising inflation and interest rates, and falling sales. We have come out of the pandemic pan into the inflationary fire.'
Graham Wells - Haddington, East Lothian
(financial adviser at GroWiser Financial Coaching)
'We're all suffering from the unintended consequences of government meddling with the pricing of privately owned energy supplies. From 2019, the price of energy units has been capped in an attempt to stop consumers being ripped off. That sounds fine, but it means the short sighted, vote-winning policy has landed us with huge price spikes, rather than more gradual increases, which are easier to plan for. It's now vital that the Government provides the support that's needed to cushion consumers from these excruciating price increases. Maybe it's time for leaders to re-consider the sale of publicly-owned utility provision and properly embrace the UK's potential for hydro, wind, wave and tidal power.'
(chief executive of gift box company Colleague Box)
'This is just another dagger in the heart for small business owners. The crushing realisation that no matter what you do, your performance, sales, your deemed success will inevitably be out of your hands and instead controlled by the greedy corrupt few at the top who only care about profit. The reality is that those in power couldn't care less about small business owners so you're left to fend for yourself, hope and pray that you make it through yet another avalanche of adversity.'
Lewis Shaw - Mansfield, Nottinghamshire
(mortgage expert at Shaw Financial Services)
'Welcome to our winter of discontent. We are utterly rudderless in a storm with nobody on deck taking charge. This has all the hallmarks of serious civil unrest if we're not careful. People are already stretched beyond breaking point, which will be the last straw. The worst thing is that even an emergency budget won't be able to tackle the crisis due to the time it takes to get through Parliament and the OBR. With further base rate increases to contend with and another price cap hike in January, it's fair to say our economy is broken, and we're teetering on the brink.
Nikki Collier - Sudbury, Suffol k
(owner of baby clothes firm BiNibabies)
'This could be the end. I've survived a pandemic, I've survived a post pandemic shift in shopping habits but today's news may just topple my business. My bills have already doubled from February to August, so just what do we do? I'm absolutely lost for words. The country is crumbling and on its knees. We really do need to keep local businesses going otherwise millions of people will be in severe financial difficulty.
Samuel Mather-Holgate - Swindon, Wiltshire
(financial advisor at Mather and Murray Financial)
'I am really worried about the energy market in the UK. Prices are up by 80% or an average of over £130 per month but the UK Government is spending less on support than our European neighbours like Germany, Italy and France. We need much more help. For some low and medium income families, finding an extra £130 each month will be impossible and, as we know, things are going to get worse in the winter. The new Prime Minister needs to make this their number one priority, by immediately increasing the £400 rebate.'
(chief executive at money saving app My VIP Rewards)
'This latest announcement is going to ruin Christmas for countless families around the UK and make winter potentially brutal. Millions of people simply can't afford their energy bills already and it's only going to get worse. Employers need to be doing more to support their staff but most can't afford pay rises as the economic climate is volatile at best, with a recession looming. This next six months will be an extremely testing time for everyone.'
Rhys Schofield - Belper, Derbyshire
(mortgage and insurance expert at Peak Money)
'It's catastrophic. The Government isn't just asleep at the wheel, it genuinely feels like they couldn't care less about the plight of normal people and businesses. They botched Brexit, they botched the response to Covid and now they're botching handling the cost of living crisis.'
(regenerative culture expert at New Forest Aquaponics)
'The impact on our non-profit could be catastrophic. We are an aquaponic farm and have to pump water and oxygen around the systems to keep the fish alive. This week, we will be working on the systems so we can reduce the number of pumps running. However, there will be a limit of how many times we can do this, with the survival of many fish at risk. The Government needs to act and act now.'
(mortgage expert at SelfEmployedMortgageHub.com)
'The energy price cap has almost tripled already this year, with further hikes to come. Clearly, this is unsustainable. The case for expanding the windfall tax is now overwhelming. The £5 billion it's currently set to raise will barely touch the sides. And with the cost of renewable energy about a tenth of gas last week, the government needs to double down on wind and solar power. Mortgage affordability is going to become even tougher. I expect more lenders to decline deals that would have sailed through a year ago, down valuations to increase and property prices to fall sharply over the next year.'
Suzanne Noble - Kilburn, North West London
(education expert at Startup School for Seniors)
'We've noticed a rise in applications to our programme, Startup School for Seniors, supporting people to start a business, caused by many people's concerns about how they will pay their bills this winter. The money has to come from somewhere, and creating a side hustle is one way to try and fill an income gap.'
(mortgages expert at Key Mortages)
'This will undoubtedly have an impact for consumers as we are not talking about a slight increase, we are talking about hundreds of pounds a month which will cause a squeeze for anybody. I expect to see a shift in how much consumers are able to borrow as lenders will no doubt adjust their affordability calculations. This will mean people cannot afford the houses they would like to buy and therefore demand for property is likely to fall. However, what we may also see is people being unable to afford their mortgages when their fixed deals end due to rising interest rates, which may cause people to look to sell and downsize.'
(founder of property data experts Propflo)
'This huge increase highlights our over-reliance on fossil fuels. We need a carbon net neutral, more resilient energy system. There is general lack of awareness of the wider benefits of more energy efficient homes. In addition to the temporary help with bills, the Government should phase out the cap altogether and provide support for people to finance green improvements to their homes and incentives for landlords.'
Small firms are pleading for the Government to step in over sky-high energy bills, which have soared by as much as 400 per cent in some cases, leaving many fearing they could be put out of business by the end of the year.
More than half of small companies — 54 per cent — fear their running costs could force them to close, according to a report by SME Insights and insurer Simply Business.
Businesses are not protected by energy watchdog Ofgem's price cap and they face paying 20 per cent VAT on their energy bills, whereas most ordinary households pay five per cent.
The crippling energy price increases are forcing many of Britain's remaining pubs, restaurants and high street businesses - which have scraped through lockdown - to reduce their hours, and in some cases, close permanently.
Butcher's shop T & P. A. Murray in Bristol — known as 'Murray's' to its loyal regulars — closed its doors for the final time this month after 28 years at the premises, which has been occupied by a long line of butchers since the 1800s.
Tom Murray, 65, had planned to leave his beloved business in the safe hands of Nathan Havnes, 32, who joined Murray's as an apprentice when he was 16.
But supply costs have risen drastically, the price of beef and cheese for the deli counter is up 15 per cent, and the shop's £11,000 business rates bill is also expected to escalate.
Closed: Crippling costs: Tom Murray and Nathan Havnes outside T & P. A. Murray butchers on Gloucester Road, Bristol which closed its doors for the final time this month
When Mr Martin's energy supplier raised his annual bill from £7,000 to £22,000, he says it left him with no choice but to close.
'It was the straw that broke the camel's back,' Mr Martin said. 'We made a £30,000 profit in a good year, but those energy bills would have left us with a loss.
Abby McKellar, 46, is considering closing the holiday let business she runs with her husband Matt, 50, over winter in order to stay afloat.
Little Norton Mill, which comprises four self-catering cottages and four apartments in rural Somerset, relies solely on electricity.
In January, their energy bills increased by 70 per cent from £10,000 to £17,000 a year.
And the couple fear they could spiral further when their fixed deal ends at the beginning of next year.
Abby says: 'To soak up the electricity cost alone, we would have had to increase our prices by 10 per cent this year — and that does not even include all the other costs that are going up.
'If you raise those prices, people will just stop coming. It's a perfect storm.'
'Nathan has two sons and the last thing I wanted was to put him in a situation where he would struggle, which could affect his family life.
'It feels that while there is some support for households, small businesses have just been dropped by local councils and the government,' he adds.
The story is far from isolated as thousands of small businesses, many of which struggled to survive through the pandemic, are on the verge of collapse due to the cost-of-living crisis.
Last night, experts warned that the energy crisis could 'shut down' Britain this winter, leaving high streets devoid of pubs, shops and restaurants.
Lily and Stuart Beaton have also been left with no alternative but to shut up shop. The family-run Ainsty Farm Shop in Green Hammerton, North Yorkshire, which has a butcher, baker and deli, has served its local community for 22 years.
During the pandemic, they boxed up and hand-delivered food to older people in the nearby area who weren't able to leave their homes.
But when the couple's gas and electricity deal ends in September, their bills are set to more than triple, from £20,000 to £76,000 a year.
Lily, 52, says: 'We have no choice but to shut. Myself, my husband and my 18-year-old son Henry all work here full time, so we have basically all lost our jobs.
'You watch the news and hope that somebody is going to step in and do something about the energy crisis, but nobody has.
'I think we've been overlooked. Most small businesses don't run on big margins. We realised we would be making a loss once we paid that first bill.
'We can't pass on higher costs to our local customers, many of whom are retired. People are going to have to shop at places they can afford.'
And Lily fears other enterprises will be forced to follow in their footsteps.
'At some point soon, people are going to want to treat themselves to fish and chips or want to pop to the local farm shop, and they won't be there,' the mother-of-three adds.
Nearly three-quarters of pub landlords say they have seen their utility bills double as they urged the Government to reduce VAT and business rates.
Lily and Stuart Beaton have also been left with no alternative but to shut up the family-run Ainsty Farm Shop in Green Hammerton, Yorkshire
Critics fear this could be the death knell for many of Britain's high streets.
Pubs are being driven towards 'extinction' by soaring energy bills – with as many as seven in ten saying they will not survive the winter.
Two-thirds of pubs said their bills have more than doubled this year, while almost one in ten (8 per cent) have seen them rise by more than 500 per cent.
And around 70 per cent of pubs surveyed by industry magazine The Morning Advertiser said they would go bust this winter without Government support – which the magazine warned amounts to 'extinction'.
Businesses are not protected by the energy regulator's price cap, meaning pubs, bars and restaurants in the UK will be forced to pay market rates for gas and electricity.
While Ofgem's household price cap is expected to rise from £2,700 to £3,700 in October – and by much more after that – businesses will be left at the mercy of volatile markets.
It comes after industry leaders pointed out that if the price of beer had risen at the same rate as wholesale gas, a pint would cost £25.
UK Hospitality chief executive Kate Nicholls said the sector was facing 'unsustainable' energy hikes, and called for business rates relief and the removal of VAT from energy bills until prices become affordable.
She said: 'Without this support there is no doubt that many of the UK's most loved pubs and bars will not survive to see the New Year, robbing many of their livelihoods and ripping the heart out of communities across the UK.'
Heath Ball, from the Frisco Group of three pubs in south-east England, warned the soaring bills posed an even bigger threat to the sector than the pandemic. Mr Ball said: 'Brits face the prospect of losing thousands of pubs if something isn't done soon to help.'
Sacha Lord, Greater Manchester's night-time economy adviser, said staying in business was becoming 'near impossible' for many. 'I think we will see pubs closing at a record rate over the next 12 months,' he added.
There were 20,200 fewer businesses between April and June this year than there were during the same period last year — the largest loss recorded by Labour researchers in five years.
Clive Betts, Labour MP for Sheffield South East and chair of the Levelling Up Committee, says: 'I think for many struggling businesses, these soaring bills could be the tipping point.
'Empty shops make up 20 per cent of some high streets, and if this figure continues to multiply they will just become redundant because shoppers won't visit them.
'People looking to set up new businesses such as cafes and restaurants may also reconsider opening at all.'
Independent retail expert Clare Bailey adds: 'The combination of these rising costs will inevitably prompt some small firms to reconsider if they need high street premises or whether they can do everything online instead.
'This will potentially lead to an increase in shops leaving the high street.'
There was also a sharp increase in the number of companies applying for credit between April and July this year, research by the Federation of Small Businesses (FSB) shows.
About 11.5 per cent made a credit application compared to a record low of 9.1 per cent in the first quarter of this year.
Small businesses, which employ 16 million people among them, are particularly vulnerable to bill increases. This is because they are not protected by energy watchdog Ofgem's price cap — currently an average of £1,971 a year.
Firms are also not entitled to government support, so are missing out on the £400 discount and £150 council tax rebate announced earlier this year. On top of this, many pay 20 per cent in VAT on energy bills — whereas most ordinary households pay 5 per cent.
The FSB is now calling for the Government to step in and extend the price cap to Britain's smallest firms.
While some local councils offer general hardship funds for firms in financial difficulties, there is no specific help with energy bill hikes.
Alan Soady, an FSB spokesman, says: 'Small businesses are seeing astronomical and unsustainable hikes in energy bills right now.
Without urgent support this is fast becoming an existential threat to some small firms, coming on top of a wider cost of doing business crisis.
'While domestic consumers quite rightly have at least some protection through the price cap and are being given direct cash support, there is no cap for small businesses and currently no financial support either, despite many seeing bills going up three-fold, four-fold and more.'
The White Horse Inn, in Droxford, Hampshire, has been forced to close after its energy bills doubled and tenants Shekhar and Alex Nailwal were unable to get any assistance from the government or landlord Admiral Taverns
The White Horse landlord Shekhar Nailwal, 45, and his wife Alex, 39, have run the cosy pub for eight years and are devastated at having to leave their local community behind
The closure means Mr and Mrs Nailwal may now have to move their two sons Rudra, 10, and Prem, 14, away from the village they have called home for the best part of a decade
In Droxford, Hampshire, pub landlord Shekhar Nailwal, 45, said he was left 'on his knees' with rocketing fuel, food and alcohol bills. It led to him and his wife, Alex, 39, to take the 'heartbreakingly sad' decision to close their much-loved The White Horse after eight years.
The quaint village pub was well-loved in its local community for its unusual Indian menu served alongside traditional lagers and cosy inn decor, with a sprawling terrace garden.
The closure means Mr and Mrs Nailwal may now have to move their two sons Rudra, 10, and Prem, 14, away from the village they have called home for the best part of a decade.
The pub's energy bills have doubled and the price of a box of chicken has gone up by a whopping £25 from £30 to £55, leaving running costs completely unsustainable. The couple say Admiral Taverns, who they rented the pub from, refused to help
'People travel for miles to come and eat here and they're all devastated. We're all just really, really upset,' said Mr Nailwal (pictured with his wife)
Mr Nailwal said: 'The cost of everything is rising and we can't keep passing that on to the customers because people are already suffering.
'In a cost of living crisis, the first thing to go is going to the pub and going out to eat. It's not just simple numbers, it's a lot of factors.
'We have been trying to sustain the costs since January. We luckily made it out of lockdown thanks to our customers and help from the government. But the cost of supplies and fuel has gone up so suddenly.
'It's just all these small things adding up and adding up and suddenly the business is just not financially viable anymore.
'The worst part for us is our kids go to school here, we have brought our family up living upstairs from this pub.
'People travel for miles to come and eat here and they're all devastated. We're all just really, really upset.'
Mrs Nailwal added: 'We've invested so much time and effort into this place, even sacrificing our time with the kids for the sake of this pub and the community, which we love.
'It's so heartbreaking because we feel like we're all part of a big happy family but now we have to break up with them.'
A spokesperson from Admiral Taverns said: 'We have 1,600 pubs across the country, and we work hard to work in partnership with all our licensees.
'The licensee has taken the decision to leave, and we are in the process of looking for a new licensee to take on the pub, and ensure the White Horse has a long-term, sustainable future.'
In south Wales, pub landlords Colin Ross and Tom Davies say they were forced to quit their beloved pub due to 'astronomical' energy bills.
The lifelong friends told Wales Online they are leaving the Hafodyrynys Inn, near Crumlin, 'with a tear in their eye' after 26 years .
After narrowly making it through Covid restrictions, Mr Ross said a 'ridiculously high' increase in energy costs was 'the final nail in the coffin'.
In south Wales, pub landlords Colin Ross and Tom Davies say they are forced to quit their beloved pub the Hafodyrynys Inn, near Crumlin, 'with a tear in their eye' after 26 years as bills have risen 'astronomically'
He said: 'Gas and electricity have more than doubled. Our contract expired at the end of July and we're on a new rate which is astronomical. Before, it was £700 monthly, which is high anyway, and it's gone up to near enough £2,000. It makes it impossible to stay here.
'I think something should be done about it because at the end of the day, more places are going to go out of business. It's not just businesses facing high bills, it's the customers, and they're not going to be coming out with extra money to spend on beer and food.'
They said they were unable to negotiate a reduction in rent with owner Admiral Taverns, despite the sharp rise in inflation.
The pair's last day will be September 4 and their Facebook page has been flooded with comments from saddened customers.
One said: 'How sad to be reading this, you have dished up the best ever Sunday lunch and your staff are amazing.' Another wrote: 'Such devastating news. You have both worked so hard to build up the pub over the years, you're a credit to the trade.'
Elsewhere, The Hand Hotel in the village of Llanarmon, near Wrexham, north Wales, is faced with running costs that have soared from £1,900 to £9,500 per month.
Owner Jonathan Greatorex says he was shocked to open his renewal quote to see the eye-watering sums for the fine dining restaurant, which is featured in the Michelin Guide.
He is now calling on the government to take action - and says ensuring that his staff are well-provided for is his priority.
Mr Greatorex said: 'It is staggering. For many businesses these increases are not survivable. The increase in costs would see us paying four times our monthly mortgage for energy.
The Hand Hotel in Llanarmon, near Wrexham, north Wales, offers a fine dining experience but is being forced to cut its hours after its bills rose by 400 per cent
The running costs of the restaurant and hotel have leapt from £1,900 per month to £9,500
'Without action and support we will have to look at options like closing a couple of days a week or shorter opening hours.
'As with the Covid pandemic our first concern is the staff we have here, we feel that responsibility and will always put staff first.'
The Hand owner Jonathan Greatorex says the energy price increase is 'not survivable' for many businesses and has called on the Government to take action
Mr Greatorex says businesses are set to suffer with the surge in power bills - and warns jobs across the country will be at risk.
He said: 'We have this moribund government playing a second rate game of The Apprentice and we can't wait until the September 5, when the winner will be announced, for action on this.
'There is also the obsession with the household cap and it is horrendous and invidious that families will be in the situation of choosing between eating and heating. But they have totally missed the effects on businesses.
'This will affect the very fabric of society once food shops and petrol stations start to close as they inevitably will without intervention.
'And how are households going to manage their bills if people are losing their jobs.'
'We can't just blame this on Russia, energy companies are making billions of pounds of extra profits this year. This is not a luxury item and they have a moral responsibility to do more to help.'
The Hand's financial woes are a sad turnout for a restaurant which has been praised for offering 'destination dining at its best' in a review this month by Mail on Sunday. Reviewer Simon Hepinstall praised The Hand's head chef, Greg Mulholland, who has two AA Rosettes for 'culinary excellence' and has led its fine dining over the past 18 years.
In another case, David Bright is CEO of Renovare Group, which has seven hospitality venues. He says one of its holdings, a small hotel in Wales, had an average monthly electricity bill of £2,000 prior to April of this year but his July bill has now come in at £7,000.
Its heating system runs on oil and that was 35p a litre on average a year ago, yet this is now 92p.
Mr Bright said: 'While we took a beating during covid which had a major impact on our situation, we are now faced with the inevitability of a stagnant 2023/24.
'It is clear that any profits we had projected will be swallowed up by the ridiculous raises in energy that we are being forced to swallow. Our losses will most likely equal those during covid.
'At the moment, I have made the difficult decision to shut two of the seven venues and I hope that with the savings made, we will be able to weather the storm. We employ over 70 people and I am pleased to say that those affected by the closures were either students returning to school or they were rehoused at other venues.
'This will not resolve itself soon. I have been forced to raise my prices by 5 per cent in the immediate future and we will have to look at it again before Christmas.'
In Rotherham, South Yorkshire, couple Damien (pictured) and Maxine Bailey closed their tattoo parlour Bailey's Body Art after 16 years, saying they could no longer manage the rising costs.
The tattoo salon was renowned for its quirky body art but it has been forced to close due to spiralling inflation after surviving through two years of Covid restrictions
In Rotherham, South Yorkshire, couple Damien and Maxine Bailey closed their tattoo parlour Bailey's Body Art after 16 years, saying they could no longer manage the rising costs.
Mrs Bailey told Mail Online they were devastated at its loss. She said: 'We gave our blood, sweat and tears, sometimes starved and went without anything good to keep it afloat and now it has gone. What a waste of our lives.
'We have children we hoped to pass it on to.... I worked in lockdown for this country and for what. We never had any financial assistance.'
In a parting message, Mr Bailey posted that their 'hearts were broken' and they 'gave it all they had over 16 years'.
In Edinburgh, much-loved pub Monty's in the popular Haymarket, says it is being forced to shut down after the double whammy of the pandemic and the rising cost in bills.
The pub, which opened to much fanfare in 2016, has not announced a closure date yet said it would continue to serve 'while supplies last'.
In Edinburgh, much-loved pub Monty's in the Scottish capital's popular Haymarket, says it is being forced to shut down after the double whammy of the pandemic and the rising cost in bills
The pub made the announcement to customers on Instagram this month.
They posted: 'After almost six years of building up our wee business, serving some of the best beers in town, amazing selection of whiskies and local spirits, and some amazing products, I have to announce that Monty's will be closing at the end of the month.
'Unfortunately the high rent, the pandemic, cost of living, rising costs of everything, it doesn't work in our favour. I have tried to fight for a rent reduction, unfortunately our landlords would like someone in with a more commercial offering.'
Andrew Goodacre, chief executive of the British Independent Retailers Association, says scores of firms have been struggling since late last year. He predicts many will try to stay open over Christmas, hoping for increased sales, but that the crunch point will come in the New Year.
And with households having to tighten their own purse strings, he fears a bleak winter ahead.
'That's when the cash flow is normally under pressure and it could be the tipping point for many. We should have had this debate nine months ago. The warning signs were there,' Mr Goodacre adds.
Tarun Gidoomal, general manager of wholesale marketplace Ankorstore, said: '(Today) marks the announcement of a new energy price cap for consumers, however, it's remarkable that no such cap exists to protect Britain's independent retailers and small businesses.
'With the traditional renewal date of October 1st for fixed price energy contracts looming, 92 per cent of British independent retailers have stated that their local high street is already struggling, with three-quarters (74 per cent) believing that an upcoming recession will provide the largest threat to their survival, almost double the threat posed by COVID. Simply put - time is running out for the government to step up and protect retailers.
'We urge the government to introduce a price cap for British SMEs, including independent retailers and brands, as well as supporting BCC's proposal for a temporary cut in VAT to 5 per cent to reduce energy costs for businesses.'
Nearly seven in ten firms now expect their energy bills to rise in the next three months, with almost a third predicting increases of more than 30 per cent, according to research by the Confederation of British Industry.
Matthew Fell, chief policy director at the lobby group, says: 'The guiding principles for any intervention must be to act at speed, and to target help at those households and firms that need it most.'
Tory leadership front runner Liz Truss has hinted she may help smaller companies but would not 'reach first for the handout'.
In an interview with the Sun on Sunday she said: 'I'm very, very aware that it's not just customers, or consumers, that are facing energy price problems, it's small businesses.'
But along with rocketing energy bills, small businesses are also facing increased costs in supply chains with the hike in food and fuel costs, and many are juggling debt repayments after signing up for bounce-back loans during the pandemic.
Independent retailers were given 100 per cent relief on business rates in 2020, to help them through the pandemic. But this relief was slashed to 66 per cent in July 2021, and then to 50 per cent in April this year.
Meanwhile, most Scottish firms are now back to paying full business rates —unless they are eligible for Scotland's Small Business Bonus Scheme
And rates are set to surge even higher next year — as increases are pegged against next month's Consumer Price Index inflation figure, which is predicted to hit 13.3 per cent.
Real estate advisory firm Altus Group estimates that even at 11 per cent, it would add £3 billion to businesses' tax bills in England — the single biggest jump in the space of a year since the tax was introduced in 1990.
Val Burrows, 64, who runs a launderette in East Grinstead, West Sussex, saw her energy bills rise by 173 per cent when her fixed offer ended in July.
And unlike other high street businesses, she says she cannot cut back on energy usage.
Miss Burrows, who lives in nearby Lindfield, thinks that the Government should impose a blanket energy cap for businesses, and that there should be emergency funds available like those given out during the pandemic.
As a sole trader, she says she has to continue until her lease ends next year.
'But then I may have to consider shutting up shop if I don't get financial help,' she says.
A spokesman from the Department for Business, Energy & Industrial Strategy says: 'No national government can control the global factors pushing up the price of energy, but we will continue to support business in navigating the months ahead.'
It adds that this support includes slashing fuel duty by 5p per litre for a year until March 2023, and the 50 per cent business rates relief.
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