'Millions of households' facing 'catastrophic' rise in energy costs as PM urged to take action

ITV News Correspondent Neil Connery on how rising energy costs will hit Britons next year

"Millions of households" are facing a "pretty catastrophic" rise in energy costs, a fuel poverty charity has warned, with Boris Johnson being urged by senior Tory backbenchers to take action.

The government acknowledged rapidly rising energy bills will cause “challenges” for Britons after several Conservative politicians wrote to the prime minister, urging him to scrap taxes on them.

The letter, published in the Sunday Telegraph and signed by 20 politicians including work and pensions secretary Esther McVey, urges Mr Johnson and Chancellor Rishi Sunak to help consumers facing “fuel poverty” as gas and electricity payments continue to rocket.

They argue that the UK is causing energy prices to increase faster than any other comparable country due to “taxation and environmental levies”.

“We hardly need to point out that high energy prices, whether for domestic heating or for domestic transport, are felt most painfully by the lowest paid,” the letter states.

Health minister Ed Argar said the government has put in “a whole range of measures” including the Warm Home Discount, the Household Support fund and changes to the Universal Credit taper to help protect poorer families and pensioners from rising costs.

Prime Minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak Credit: Leon Neal/PA

He told Times Radio that the economy is “bouncing back” after a challenging two years.

“We’re seeing a large number of job vacancies, so the economy is bouncing back, but equally we do recognise the challenges people face with household bills and with the cost of living,” he said.

“There’s a whole range of measures we are putting in, targeted measures, to help support people with the cost of living and those key household bills.”

The letter argues that removing VAT on energy bills and environmental levies which fund renewable energy schemes could save the average household £200 on their energy bill.

Others to sign the letter include Craig Mackinlay, chairman of the Net Zero Scrutiny Group of Conservative MPs, Robert Halfon and Steve Baker.

Adam Scorer, chief executive of fuel poverty charity National Energy Action said rising prices will be “pretty catastrophic for millions of households”, to which the Government has not given a “proportionate or significant response”.

Speaking on Sky News, Mr Scorer said in the short term the Government must make the poorest people exempt from paying increased prices, and better insulate homes as “the most important” long-term solution.

Conservative Mr Halfon said the government is not to blame for energy price hikes but insisted more decisive measures are needed.

“I have huge worries about the rise in energy costs for hard-working people across the country and they’re going to rise even more,” he told BBC Breakfast.

“This is not the government’s fault, this is because of the international price of energy, and I strongly believe, that given the price cap is going to go up this year in the spring, that the Government should look at other measures.”

The current cap for the average household is £1,277 a year. The Tony Blair Institute for Global Change, estimates it could rise to almost £1,800 in April.

"For people who are switching from what were cheap fixed-price deals, which expire and go onto the price cap, they might be seeing a rise of between £700 and £900," said Tim Lord, senior fellow at the Tony Blair Institute.

Octopus Energy chief executive Greg Jackson said providers must work together to “privately finance” solutions and the Government must put a “mechanism in place that (every provider) has to participate in”.

He added that investing in renewable energy infrastructure would decrease bills in the future.

“The more renewables we build, the better the payback for that societal investment,” Mr Jackson told Times Radio.

“We really are on the cusp of energy bills falling every year. It sounds crazy because of where we are today.

“We need really strong action in the short term to bring current bills down to make energy manageable, and at the same time with urgency start building these future systems so it can’t go back up again.”

Households are expected to see a severe hike in the cost of their energy in April as suppliers are due to increase prices in line with these costs.

More than two dozen energy suppliers have also gone bust since the start of September, putting thousands of people out of work and leaving millions of homes in limbo as they wait for a new supplier.

Providers including Good Energy, EDF and trade body Energy UK have also urged the government to intervene, after the cost of gas in wholesale markets rose by more than 500% in less than a year.