Falling energy price cap will be cold comfort for over seven million families who will face higher bills this winter

The Ofgem energy price cap will fall to £1,923 from October for a typical household, but over one-in-three households across England – 7.2 million in total – will face higher bills this winter than last, highlighting the urgency of further government support for hard-pressed families, the Resolution Foundation said today (Friday).

The Foundation notes that the upcoming price cap is almost £200 lower for the typical household than last winter’s effective cap of £2,100 – driven by the £2,500 Energy Price Guarantee and £400 universal energy bill rebate.

However, while the price per unit of energy is falling, this will be offset by a rise in the daily standing charge and the end of the £400 universal payments. As a result, while the biggest falls in bills will be seen by those consuming the largest amount of energy, those who consume less than four-fifths of a typical household’s energy usage are likely to see their bills rise this winter, compared to the same period last year.

The Foundation’s analysis using the new Ofgem price cap shows that over a third (35 per cent, equivalent to 7.2 million families) of households across England will face higher bills this winter compared to last, rising to almost half (47 per cent) of England’s poorest tenth of households.

Around one-in-eight households (13 per cent, equivalent to 2.8 million households) will see winter energy bills increasing by £100 or more this year, rising to almost a quarter (24 per cent) of those in the poorest tenth of families.

The Foundation notes that while many of these families will be supported by cost of living payments this winter, others won’t, and the scheme is due to end altogether next Spring. This highlights the urgency of introducing a new social tariff for energy bills for hard-pressed households, which the government consulted on last spring but has failed to make any progress on since then.

The Government should also reduce British families’ exposure to volatile gas prices by encouraging more homes to be better insulated and speeding up the switch to heat pumps, says the Foundation.

Jonny Marshall, Senior Economist at the Resolution Foundation, said:

“Falling wholesale gas prices have finally brought the energy price cap down below £2,000. However, this is still over 50 per cent higher than families were used to before Russia invaded Ukraine, while the end of the £400 universal payments and rising standing charges mean that over one-in-three families across England will face higher bills this winter than last.

“With almost three million households set to see their bills rise by over £100 – at a time when inflation is still sky high – the Government must up its game in providing longer-term support for hard-pressed families with a new social tariff for energy bills.”