A 12% rise in the energy price cap has taken effect amid warnings further increases are inevitable in the months ahead as wholesale costs surge in a time of “chaos” for the wider economy.
Labour, which has claimed a “winter of discontent” looms, accused the government of complacency over “the fuel crisis, energy costs crisis, and supply chain crisis” – factors all being blamed for adding to consumer and business costs.
The price cap shift will affect more than 15 million households stuck on so-called default tariffs – price plans for gas and electricity provision that are automatically charged to those who fail to switch or select fixed-rate deals.
The cap is rising by £139 to £1,277 while prepayment customers will see an increase of £153 to £1,309.
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Your energy bills might shoot up – here’s what to do
Ofgem, the industry regulator which is charged with making the cap fair for suppliers and customers alike, said at the time of its price cap review in August that the hike reflected a 50% increase in wholesale energy costs over the past six months.
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However, industry experts have warned that another leap is likely to be imposed from April – when the next review is due to take effect – as wholesale gas costs for next-month delivery have only accelerated.
Figures from industry analytics firm ICIS this week showed an increase of more than 600% over 12 months.
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Contracts for delivery in March are currently at levels just below those for November.
The rocketing sums prompted senior economist at the Resolution Foundation, Jonny Marshall, to declare that “another big rise” in the price cap lay ahead.
“There is little respite in sight for energy bills going up and up and up,” he told Sky News.
The unprecedented and staggering pace of the increases as the weather turns have been blamed for the deluge of small energy company failures – 10 of them last month alone – as their business models leave them at the mercy of near-term price spikes.
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Ofgem: Soaring prices could be here to stay
The reasons for the record price levels are many and complex but can be largely put down to global supply issues as economies get back in gear following COVID-19 disruption.
A cold end to last winter in Europe left gas stocks lower than usual and competition for raw energy more widely has intensified globally with China, the world’s second-largest economy, experiencing blackouts.
In the UK, a lack of wind generation and even a fire in Kent last month have been blamed as contributing factors.
Image: The electricity interconnector fire at Sellindge in Kent last month will keep it out of action for six months
The spike in power prices has forced attention on the impact on households amid warnings that higher energy bills will combine with the loss of government aid packages to leave millions of families facing hardship.
Data from the campaign group End Fuel Poverty Coalition suggested the rise in the price cap alone would see the numbers in fuel poverty in England rise to an estimated 4.1 million.
Image: The 10 local authorities worst affected by fuel poverty. Source: End Fuel Poverty Coalition Index
Image: The 10 local authorities least affected by fuel poverty. Source: End Fuel Poverty Coalition Index
Its research identified Barking & Dagenham, Stoke-on-Trent, Newham, Shropshire, Herefordshire and King’s Lynn and West Norfolk as fuel poverty “coldspots”.
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Building resiliency into the UK energy market
A report by Citizens Advice on Thursday said the poorest households could lose £37.40 a week as energy company failures coincided with the end of the pandemic-driven £20 Universal Credit uplift and furlough scheme.
Consumer groups say the best way for energy customers to protect themselves from rising gas and electricity bills is to review their tariff and shop around but, given the scale of the wholesale price increases, some admit the price cap could prove the best defence in the short term as suppliers are forced to pay record sums in the current market.
The ability to afford the cost of a break or evening out is also shrinking as a temporary cut in VAT to help hospitality and tourism businesses recover from the pandemic has been partly withdrawn – rising from 5% to 12.5%.
All this as the economy battles a record worker shortage in the wake of Brexit with the 100,000 shortfall in HGV drivers raising costs in the supply chain and contributing to the current fuel delivery crisis that has seen many forecourts sucked dry by panic-buyers.
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Fuel crisis ‘is back under control’ says government
The Bank of England expects the rate of inflation to surge from its current level of 3.2% to beyond 4% by the end of the year – with governor Andrew Bailey admitting this week that the economy faced “hard yards” ahead.
Critics of the government have accused ministers of sleepwalking into the price crisis and demanded more intervention.
Labour declared that the new £500m household support fund for England, revealed on Thursday, was a “temporary and inadequate sticking plaster” as families grapple challenges on many fronts.
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Ministers have been warned they have just 10 days to sort out supply chain issues or face ruining Christmas for millions.
Shadow business secretary Ed Miliband said: “We are in desperate need of leadership to contain this chaos.
“It is Conservative complacency that has led to the fuel crisis, energy costs crisis, and supply chain crisis our country is experiencing, with ministers ignoring warnings from businesses and failing to plan ahead.”
He added: “Ministers are blaming the public and failing to acknowledge the scale of the problem.
“We need to make Brexit work, and that starts with addressing the huge shortfall of HGV drivers that is causing mayhem in our supply chains.”
A spokesperson from the Department for Business, Energy and Industrial Strategy said: “The energy price cap is shielding millions of customers from rising global gas prices. Even with today’s planned increase, the cap still saves households up to £100 a year and is in addition to wider support for vulnerable, elderly and low-income households.
“Earlier this week we announced a new £500m Household Support Fund which will help those in greatest need with the cost of essentials over the coming months – and families will continue to benefit from Winter Fuel Payments, Cold Weather Payments and the Warm Home Discount, which is being increased to £150 and extended to cover an extra 750,000 households.”
Donald Trump has warned that all goods from Japan and South Korea will face tariffs of 25% from 1 August.
The announcement, via his Truth Social platform, marks the restart of the threatened “liberation day” escalation that was paused in April, for 90 days, to allow for negotiations to take place with all US trading partners.
The president showed off copies of letters to the leaders of both Japan and South Korea informing them of the tariff rates. Those duties will come on top of sector-specific tariffs – such as 50% rates covering steel – already in force.
He warned the rates could be adjusted “upward or downward, depending on our relationship with your country”.
Country-specific tariffs had been due to take effect from Wednesday this week but Mr Trump had earlier revealed that nations would start to get letters instead, setting out the US position.
The letters sent to Japan and South Korea cited persistent trade imbalances for the rates and included the sentence: “We invite you to participate in the extraordinary Economy of the United States, the Number One Market in the World, by far.”
He ended both letters by saying, “Thank you for your attention to this matter!”
The European Union – the biggest single US trading partner – is among those set to get a letter in the coming days.
Mr Trump has also threatened an additional 10% tariff on any country aligning itself with the “anti-American policies” of BRICS nations – those are Brazil, Russia, India, China and South Africa and whose members also include Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.
The UK, bar a massive shock U-turn, should be exempt.
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2:49
What does the UK-US trade deal involve?
The country was the first to be granted a trade deal, of sorts, in May and the Trump administration has claimed many others had been offering concessions since the clock ticked down to 9 July.
The UK is not expected to face any changes to its current 10% rate due to the trade truce, which came into effect last week.
While UK-made cars aerospace products face no duties under a new quota arrangement, it still remains to be seen whether 25% tariffs on UK-produced steel and aluminium will be cancelled.
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5:08
Can the UK avoid steel tariffs?
They could, conceivably, even be raised to 50%, as is currently the case for America’s other trading partners, because no agreement on eliminating the rate was reached when the government struck its deal in May.
It all amounts to more uncertainty for the UK steel sector.
A No 10 spokesman said on Monday: “Our work with the US continues to get this deal implemented as soon as possible.
“That will remove the 25% tariff on UK steel and aluminium, making us the only country in the world to have tariffs removed on these products.
“The US agreed to remove tariffs on these products as part of our agreement on 8 May. It reiterated that again at the G7 last month. The discussions continue, and will continue to do so.”
China and Vietnam have also secured some US concessions.
The dollar strengthened but US stock markets lost ground in the wake of the letters to Japan and South Korea being made public, with the broad-based S&P 500 down by 1%.
Stock markets in both Japan and South Korea were closed for the day but US-traded shares of SK Telecom and LG Display were down 7.5% and 5.8% respectively.
Shares in Elon Musk’s Tesla have reversed sharply over renewed concerns about his focus on the company’s recovery as he plots against Donald Trump.
Shares in the electric car firm plunged by more than 7% at the start of trading on Wall Street – taking about $71bn (£52bn) off its market value.
The stock has often come under pressure since Musk started his association with the president, latterly helping bring down federal government costs through a new department known as DOGE (Department of Government Efficiency).
But it is now suffering as their political relationship has soured.
Musk has publicly opposed the so-called “big, beautiful bill” – Mr Trump’s flagship tax cut and spending plans that received Congressional approval last week – since he left his DOGE role.
Musk wrote in a post on his X platform on 30 June: “It is obvious with the insane spending of this bill, which increases the debt ceiling by a record FIVE TRILLION DOLLARS that we live in a one-party country – the PORKY PIG PARTY!!”
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Once the bill was passed, he created a poll on X, asking people if they would want him to launch the America Party.
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1:32
Musk v Trump: ‘The Big, Beautiful Breakup’
He wrote on 4 July: “Independence Day is the perfect time to ask if you want independence from the two-party (some would say uniparty) system!”
The vote ended with 65.4% in favour of creating the party.
The formation of the America Party was announced the following day.
“By a factor of 2 to 1, you want a new political party and you shall have it! When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy.”
“Today, the America Party is formed to give you back your freedom,” Musk posted.
Trump responded on his Truth Social account: “I am saddened to watch Elon Musk go completely ‘off the rails,’ essentially becoming a TRAIN WRECK over the past five weeks.
“He even wants to start a Third Political Party, despite the fact that they have never succeeded in the United States – The System seems not designed for them.”
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1:25
Trump threatens to ‘put DOGE’ on Musk
Trump has previously threatened to go after Tesla‘s government subsidies and contracts through the DOGE department to save “big” as their relationship deteriorated.
Such threats have also pressured the share price at Tesla.
It has suffered throughout Trump 2.0 and, in fact, has trended lower since last December – shortly after Mr Trump’s election win was confirmed.
The possibility of tariff hits to the business, followed by actual tariff disruption, along with a consumer and investor backlash against Musk’s previous DOGE role have contributed to a 35% decline on the December peak.
The very absence of Tesla’s CEO dragged on the shares.
Tesla sales suffered globally as the trade war ramped up due to the imposition of tariffs by a government he supported, until the public row between him and the president began in early June.
Musk had only just renewed his 100% focus on Tesla and his other business interests by that time.
Tesla sales were down during the presidential election campaign last year and continued to decline, on a quarterly basis, during the first half of 2025.
Neil Wilson, UK investor strategist at Saxo Markets, said of the company’s share price woes: “Investors are worried about two things – one is more Trump ire affecting subsidies and the other more importantly is a distracted Musk.
“Investors had cheered Musk stepping back from frontline politics but are now worried he’s going to sucked back in and take his eye off Tesla.”
Post Office scandal victims are calling for redress schemes to be taken away from the government completely, ahead of the public inquiry publishing its first findings.
Phase 1, which is due back on Tuesday, will report on the human impact of what happened as well as compensation schemes.
“Take (them) off the government completely,” says Jo Hamilton OBE, a high-profile campaigner and former sub-postmistress, who was convicted of stealing from her branch in 2008.
“It’s like the fox in charge of the hen house,” she adds, “because they were the only shareholders of Post Office“.
“So they’re in it up to their necks… So why should they be in charge of giving us financial redress?”
Image: Nearly a third of Ms Hamilton’s life has been dominated by the scandal
Jo and others are hoping Sir Wyn Williams, chairman of the public statutory inquiry, will make recommendations for an independent body to take control of redress schemes.
The inquiry has been examining the Post Office scandal which saw more than 700 people wrongfully convicted between 1999 and 2015.
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Sub-postmasters were forced to pay back false accounting shortfalls because of the faulty IT system, Horizon.
At the moment, the Department for Business and Trade administers most of the redress schemes including the Horizon Conviction Redress Scheme and the Group Litigation Order (GLO) Scheme.
The Post Office is still responsible for the Horizon Shortfall scheme.
Image: Lee Castleton OBE
Lee Castleton OBE, another victim of the scandal, was bankrupted in 2007 when he lost his case in the civil courts representing himself against the Post Office.
The civil judgment against him, however, still stands.
“It’s the oddest thing in the world to be an OBE, fighting for justice, while still having the original case standing against me,” he tells Sky News.
While he has received an interim payment he has not applied to a redress scheme.
“The GLO scheme – that’s there on the table for me to do,” he says, “but I know that they would use my original case, still standing against me, in any form of redress.
“So they would still tell me repeatedly that the court found me to be liable and therefore they only acted on the court’s outcome.”
He agrees with other victims who want the inquiry this week to recommend “taking the bad piece out” of redress schemes.
“The bad piece is the company – Post Office Limited,” he continues, “and the government – they need to be outside.
“When somebody goes to court, even if it’s a case against the Department for Business and Trade (DBT), when they go to court DBT do not decide what the outcome is.
“A judge decides, a third party decides, a right-minded individual a fair individual, that’s what needs to happen.”
Image: Pic: AP
Mr Castleton is also taking legal action against the Post Office and Fujitsu – the first individual victim to sue the organisations for compensation and “vindication” in court.
“I want to hear why it happened, to hear what I believe to be the truth, to hear what they believe to be the truth and let the judge decide.”
Neil Hudgell, a lawyer for victims, said he expects the first inquiry report this week may be “really rather damning” of the redress claim process describing “inconsistencies”, “bureaucracy” and “delays”.
“The over-lawyeringness of it,” he adds, “the minute analysis, micro-analysis of detail, the inability to give people fully the benefit of doubt.
“All those things I think are going to be part and parcel of what Sir Wynn says about compensation.
“And we would hope, not going to say expect because history’s not great, we would hope it’s a springboard to an acceleration, a meaningful acceleration of that process.”
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11:28
June: Post Office knew about faulty IT system
A Department for Business and Trade spokesperson said they were “grateful” for the inquiry’s work describing “the immeasurable suffering” victims endured.
Their statement continued: “This government has quadrupled the total amount paid to affected postmasters to provide them with full and fair redress, with more than £1bn having now been paid to thousands of claimants.
“We will also continue to work with the Post Office, who have already written to over 24,000 postmasters, to ensure that everyone who may be eligible for redress is given the opportunity to apply for it.”