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Gas and electricity bills are going up as the new energy price cap takes effect.

You may have read that from 1 October the price cap will mean average energy bills will increase by 27% from £1,971 a year to £2,500.

But it isn’t as simple as that.

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What is happening?

The price of gas and electricity is determined by global wholesale prices, which shot up after supplies from Russia were cut as a response to the war in Ukraine – and after energy consumption increased again after COVID.

How much these wholesale energy prices are passed on to customers is controlled by the UK regulator Ofgem in the form of a price cap four times a year.

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This price cap limits the cost households pay per unit of energy (kilowatt hours) they use.

Average annual bills had been touted to go up to £3,549 in line with wholesale prices, but Prime Minister Liz Truss’s “energy price guarantee” has reduced the original price cap announced on 26 August.

It means that from 1 October, instead of paying a maximum of 28p per kWh for electricity – people will now pay 34p.

And instead of paying a maximum of 7p per kWh for gas – they will now pay 10.3p.

Standing charges, which are the cost of connecting to the National Grid, are also going up with the price cap, but not by very much.

From now they will increase from 45p a day to 46p a day for electricity and 27p to 28p for gas.

Does the price cap cover everyone?

The price cap only covers domestic households in England, Wales and Scotland. The same level of support will be applied to the market in Northern Ireland.

Traditionally businesses are not covered by the price cap, but as part of a separate “energy bill relief” scheme, the government is providing additional support for firms.

You will be included in the price cap if you are a dual-fuel customer (use the same company for electricity and gas) on a standard variable tariff, who pays by direct debit, credit, or prepaid meter.

Standard variable tariffs mean your energy company can change the price per unit at any time – in line with global wholesale prices – but is limited by the price cap.

Fixed tariffs are agreed upon annually and mean the price per unit will not change for that year.

These are not included in the price cap, but the government says its energy price guarantee will mean a discount of 17p per kWh for electricity and 4.2p per kWh for gas.

They say this will bring fixed rates down to similar levels as the energy price cap.

If you are locked into an expensive fixed tariff, you can take a meter reading before 1 October to ensure your energy company honours the price guarantee discount.

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PM announces £2,500 average price cap

Price cap does not mean energy only costs £2,500 a year

The government estimates that the new price cap will result in average annual energy bills increasing from £1,971 to £2,500.

But that does not mean people won’t be charged more than £2,500 a year for their energy – it is just an estimate for a typical household.

According to Ofgem, a typical household in Britain has 2.4 people living in it – who use 242 kWh of electricity and 1,000 kWh of gas a month.

But all households are different – and their energy usage will depend on how many people live there, what time of day they use the most energy, and how energy efficient their home is.

For example, the government estimates that if you live in a purpose-built flat your average bill will be £1,750.

If you live in a mid-terraced house it will be around £2,350.

Those who live in semi-detached houses will pay around £2,650 a year.

And detached properties will pay roughly £3,300 annually.

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How to save on energy bills

What extra help is the government offering?

Before Liz Truss was appointed prime minister, former Chancellor Rishi Sunak announced all households would receive a £400 discount on their energy bills between October 2022 and March 2023.

From 1 October people will start to receive a £66 discount for October, another for November, and £67 for December, January, February and March.

Some energy companies are directly applying these to bills, while others will credit the amount to customers’ bank accounts.

Eight million households in receipt of certain benefits will also get £650 to help with their bills.

Pensioners will receive £300 and some people on special disability benefits will get £150.

People on low incomes and pensioners on pension guarantee credit will get £140 off through the Warm Home Discount.

Vulnerable families can also apply for extra help via their local council and their Household Support Fund.

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What about businesses?

The government’s energy bill relief scheme for England, Scotland and Wales will mean help with firms’ energy bills for six months from 1 October. A parallel scheme is operating in Northern Ireland.

Wholesale prices businesses pay for electricity will be capped at 21.1p per kWh for electricity and 7.5p per kWh for gas.

This will be applied automatically to companies using variable tariffs.

For those on fixed price contracts, the same discounts will be applied if the agreement started after 1 April 2022.

The savings will appear on bills in November and will be backdated to October.

A review will be published at the end of the year which will help identify “vulnerable” businesses that need support beyond March 2023.

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What will the UK’s recognition of Palestine achieve?

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What will the UK's recognition of Palestine achieve?

Today, Sir Keir Starmer will deliver on his pledge to recognise a Palestinian state – after setting out a series of conditions in July which there was little prospect Israel could meet, including agreeing a ceasefire with Hamas. 

The prime minister will say it recognises the “inalienable right” of the Palestinian people and what he feels is a moral responsibility to keep a two-state solution alive, amid the devastation of the war and concern about settlement expansion in the West Bank.

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This will be formally put forward by the British government at a conference of the UN General Assembly in New York this week, after a diplomatic push led by Emmanuel Macron. Canada and Australia are also expected to recognise it, although may call for Hamas to disarm.

But Labour has always said it’s a move they would make as part of a peace process, which looks further away than ever.

What does it mean?

The move has been heavily criticised and leaves a number of questions not only about what it will achieve – but about whether it will have the opposite effect on the conflict.

David Lammy as foreign secretary conceded when the pledge was announced that “it will not change the position on the ground” which can only come through negotiations.

After all, 147 of the 193 member states of the United Nations recognise it already. Palestine has permanent observer status at the UN – speaking rights, but not voting rights – where it’s represented by the Palestinian Authority. Any move to full status would have to be agreed by the Security Council where the US has a veto.

Sir Keir has made clear he doesn’t accept Hamas – which he calls a “brutal terrorist organisation” – as a government in Gaza. The borders of such a state, wrangled over for decades during multiple rounds of negotiations between Israel and the Palestinians, are also not agreed.

Read more about what the decision means

Criticism

Recognition is opposed by the Trump administration, as the US president made clear in London last week. US secretary of state Marco Rubio has said it would “embolden Hamas” and be symbolic only.

In Britain there is cynicism too. Kemi Badenoch, the Conservative leader, has accused the prime minister of a “desperate and insincere attempt to placate his backbenchers”. He heads to the party’s conference in Liverpool next week with a further slump in his approval ratings to -42%, around where Rishi Sunak’s was after his D-Day blunder.

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Could recognition of Palestine change the West Bank?

Over a third of Labour MPs wrote to Sir Keir before his pledge in July, calling for recognition of a Palestinian state. It is not clear this symbolic move will placate them, with some already calling for tougher measures including on arms sales to Israel – especially after a UN Commission of Inquiry claimed Israel had committed genocide.

Other Labour MPs oppose the recognition move. The Labour Friends of Israel group has said: “It is important to recognise that Israel is not the only party to this conflict… Hamas could end this conflict tomorrow by releasing the hostages and laying down its arms.”

The move is also opposed by the families of the hostages in Gaza, of which 20 are believed to be alive – for not imposing their release as a condition on Hamas.

Ilay David, the brother of Evyatar David, who recently appeared emaciated in a Hamas video, said: “We want to meet with Starmer but he refuses to meet with us… Giving this recognition is like saying to Hamas: ‘It is OK you can keep starving the hostages, you can keep using them as human shields’. This kind of recognition gives Hamas power to be stubborn in negotiations. That is the last thing we need right now.”

Sir Ephraim Mirvis, the UK’s Chief Rabbi has said the “unconditional” recognition of the state “is not contingent upon a functioning or democratic Palestinian government, nor even upon the most basic commitment to a peaceful future”.

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Sir Keir Starmer welcomed Mahmoud Abbas, president of the Palestinian Authority, to 10 Downing Street earlier this month
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Sir Keir Starmer welcomed Mahmoud Abbas, president of the Palestinian Authority, to 10 Downing Street earlier this month

What happens next?

Sir Keir met 89-year-old Mahmoud Abbas, the president of the Palestinian Authority, in London this month and they agreed Hamas should not be involved in the governance of Gaza.

Efforts to set up a transitional government have been discussed between the US and Gulf states. But Mike Huckabee, the US ambassador to Israel, said last week there was nothing “ready for signature”.

The UK government is expected to announce further sanctions on Hamas figures this week. But the Israeli government has already responded with fury to the prospect of recognition and it’s reported that retaliation could include further annexations in the West Bank.

The UK government sees this as an important diplomatic move with allies, when nothing else is moving the dial. But it can only be made once, and even supporters in government acknowledge that on the ground in Gaza it won’t immediately change very much.

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British fighter jets defend Polish skies after Russian drone incursion

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British fighter jets defend Polish skies after Russian drone incursion

Two British fighter jets have flown their first defence mission over Poland after a Russian drone incursion into the country’s skies.

The flight was part of NATO‘s operation “Eastern Sentry”, launched to bolster Europe’s eastern flank after Poland shot down Russian drones earlier this month.

A Russian drone was intercepted flying over Romania days later, while three Russian jets entered Estonian airspace without permission for 12 minutes on Friday.

One of three Russian MiG-31 fighter jets in images shared by Sweden's armed forces. Pic: Swedish Armed Forces
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One of three Russian MiG-31 fighter jets in images shared by Sweden’s armed forces. Pic: Swedish Armed Forces

The three incursions into NATO airspace fuelled concerns about the potential expansion of Russia‘s three-year war in Ukraine and have been seen as an attempt by Moscow to test the military alliance’s response.

The incident over Poland prompted its prime minister, Donald Tusk, to warn that his country was the closest to “open conflict” it had been since the Second World War, while the UK announced it would provide Warsaw with extra air cover.

Two RAF Typhoons, supported by an RAF Voyager air-to-air refuelling plane, took off from RAF Coningsby, in Lincolnshire, on Friday night to defend Poland’s skies before returning safely early on Saturday morning.

A Gerbera drone landed in a field in the Olesno region of Poland
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A Gerbera drone landed in a field in the Olesno region of Poland

Defence Secretary John Healey said the mission sends a clear signal that “NATO airspace will be defended”.

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“I’m proud of the outstanding British pilots and air crew who took part in this successful operation to defend our allies from reckless Russian aggression.”

He said the mission was “especially poignant” coming as the UK marks the 85th anniversary of the Battle of Britain – when Polish pilots came to the aid of the UK – this weekend.

The head of the RAF, Air Chief Marshal Harv Smyth, said: “This sortie marks the RAF’s first operational mission on Eastern Sentry, reinforcing the UK’s steadfast commitment to NATO and its allies.

“We remain agile, integrated, and ready to project airpower at range.”

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Starmer to announce formal recognition of Palestine as a state

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Starmer to announce formal recognition of Palestine as a state

The UK will formally recognise Palestine as a state, it is understood.

Sir Keir Starmer is expected to make the announcement on Sunday after he said in July that the government would make the move unless Israel met certain conditions.

The prime minister had called on Benjamin Netanyahu’s government to take substantive steps to end the “appalling situation in Gaza“, agree to a ceasefire, commit to a long-term sustainable peace, allow the UN to restart the supply of aid, and not annex the West Bank.

The Israeli foreign ministry furiously rejected his statement, with Mr Netanyahu claiming that “Starmer rewards Hamas‘s monstrous terrorism and punishes its victims”.

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Could recognition of Palestine change the West Bank?

Ilay David, brother of Hamas hostage Evyatar David, who was seen emaciated in a video last month, said giving recognition was “like saying to Hamas: ‘It is OK, you can keep starving the hostages, you can keep using them as human shields.’

“This kind of recognition gives Hamas power to be stubborn in negotiations. That is the last thing we need right now.”

There has been no ceasefire, and the situation in Gaza has deteriorated, with a declaration of a famine in Gaza City and the expansion of Israeli military operations.

Israel has launched a major ground offensive to seize all of Gaza City and destroy Hamas in an operation which has prompted widespread condemnation, with UK Foreign Secretary Yvette Cooper calling it “utterly reckless and appalling”.

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What changed in UK’s Gaza policy?

Earlier this month, a UN commission of inquiry concluded that Israel has committed genocide against Palestinians in Gaza. Israel said the claim was “distorted and false”.

The UK will join 147 of the 193 members of the UN who recognise Palestine ahead of the UN General Assembly in New York on Monday.

Other nations, including France, Australia and Canada, have said they plan to take the same step at the UN gathering as part of a broad international effort to put pressure on Israel.

During a joint news conference with the prime minister at Chequers on Thursday, Donald Trump said he disagreed with recognition, and US politicians have urged the UK and other allies to reverse their stance.

Sir Keir Starmer is expected to deliver the announcement on Sunday. Pic: PA
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Sir Keir Starmer is expected to deliver the announcement on Sunday. Pic: PA

Sky News understands that Israel is considering options in response to the UK’s decision, but the strength of that reaction is still under consideration.

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Family members of some of the 48 hostages still in captivity, after Hamas and other militant groups stormed into Israel on 7 October 2023, have written an open letter to Sir Keir, condemning the move.

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“Hamas has already celebrated the UK’s decision as a victory and reneged on a ceasefire deal,” they said.

“We write to you with a simple plea – do not take this step until our loved ones are home and in our arms.”

The UK government is understood to be looking at further sanctions on Hamas, and has demanded the group release all hostages, agree to an immediate ceasefire, accept it will have no role in governing Gaza, and commit to disarmament.

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