UK News

Ofgem confirms energy price cap will rise to £2,800 in October

Georgina Pellant - 24th May 2022

It has been confirmed this afternoon that the UK's energy price cap is set to rise again in October by nearly £1,000.

Speaking to the Business, Energy and Industrial Strategy Committee this afternoon, Ofgem's chief executive, Jonathan Brearley, said that the regulator anticipates the new price cap this October will be "in the region of £2,800".

He added that costs are currently rising at a "once in a generation" rate "not seen since the 1970s", and that this issue is something that only the government could address.

The regulator revealed the hike in prices this afternoon, as its chief executive suggested that "it's quite possible this [price cap] could go higher", telling the Committee: "The volatility in the gas market is huge."

Currently, the energy price cap sits at £1,971 - having increased by over 50% in April, reports The Manc.

That means that, within the space of six months, the regulator's energy price cap in the UK will have risen by £1,512.

Currently, here in the UK, there are nearly 6.5 million people living in poverty. However, Ofgem is now warning the government that this could well double in October when the price cap goes up again.

With UK inflation at the highest it has been in 40 years, many struggling households are also seeing price rises at fuel pumps and in the supermarket.

National Insurance tax has just been increased by the Chancellor in his spring budget, too, meaning that people are taking home less money as prices soar.

Read more: Energy price cap could be adjusted every three months under new Ofgem plans

Soaring energy bills are considered to be the biggest inflation driver in the UK right now, and there is increasing pressure on the government to do more to help families and children who are slipping into poverty as a result of the cost of living emergency.

Whilst the government has said it is willing to support people, it is yet to deliver any solutions - such as introducing a Windfall Tax on energy companies or restoring the £20 a week Universal Credit uplift to help the country's worst off.

Labour has called the price cap news 'extremely concerning', adding that it "will cause huge worry for families already facing soaring bills and rising inflation".

Read more: Tory peer who helped set up Universal Credit calls for urgent increase

Shadow Chancellor Rachel Reeves said: “How many more alarm bells does the chancellor need to hear before he acts? The government have got to get a grip on this crisis and to protect families and our economy. 

“Yet again, Labour calls urgently on the government to bring forward an emergency budget, with a windfall tax on oil and gas producer profits to lower bills for families.”

Boris Johnson's spokesperson maintained that the government is already offering help which will be 'phased throughout the year'.

They said: "Some of the support is designed to come in in October, £200 will be discounted from energy bills, the warm home discount will increase to £150 and be expanded to cover three million people, cold weather payments and winter fuel payments will be available again," the spokesman said."

Feature image - RawPixel