Orkney and Shetland MP, Alistair Carmichael, has responded today to news that Ofgem expects the energy price cap to rise to approximately £2800 in October, close to 10% of the UK median income, a further £800 rise following a major hike in April. Mr Carmichael warned that the government must treat the rise as a “once-in-a-generation crisis” and enact an emergency budget immediately to prevent millions of families falling into fuel poverty.
Jonathan Brearley, head of Ofgem, told MPs today that the price cap, which is currently at £1,971, will increase due to continued volatility in the gas market, which he called a “once in a generation event not seen since the oil crisis in the 1970s”. Mr Brearley warned that the number of people in fuel poverty could double.
The cumulative price cap rise would be over £1500 or a 120% rise relative to October 2021 prices, meaning that the energy price cap would represent almost 10% of the UK median income (£31,400). Fuel poverty is measured as when a household’s energy costs are more than 10% of their income.
Mr Carmichael said:
“Whatever the context, whatever the excuses, a price cap that rises by £1500 in a single year – more than double what it was in 2021 – is no price cap at all. Indeed you might start to question what is the point of an energy regulator that seems so loathe to actually regulate in a meaningful way.
“To put this into some perspective, a £2800 price cap would represent almost 10% of the UK median income. The thing about median incomes is that half of the population make less than that, particularly in the rural communities which struggle most with heating challenges. Millions of families risk being put into fuel poverty – a blight that we already know too well in the isles – if action is not taken.
“We need to treat this as the once-in-a-generation crisis that it is. There is still time to change course before winter comes but the government must get off their hands and recognise that this is not something that can be dealt with by half measures. We need an emergency Budget now.”