Energy bills set to rise by 20% despite expected fall in price cap
Bills will rise by an estimated £500 a year despite an expected reduction in Ofgem’s household energy cap, analysts expect.
The energy regulator will cap the amount households pay on electricity and gas bills each year at £3,294 from 1 April, Cornwall Insights has forecast – a drop from the previous cap of £4,279 effective from the beginning January to the end of March.
But customers will pay about 20% more on their bills – approximately £500 – as the government’s energy price guarantee only partially protects consumers from paying the full price cap.
Under the energy price guarantee, household energy bills will be limited to £3,000 a year from 1 April, an increase of £500 from the current guarantee rate of £2,500.
At present, the government pays the difference between energy bills accrued by households and the amount consumers pay.
When the upcoming end of the £400 energy rebate scheme is factored in the energy cost for households will increase even more, Dr Craig Lowrey, the principal consultant at Cornwall Insight, said.
“Regrettably the forecast for April looks set to leave the price cap above the increased energy price guarantee level,” Dr Lowrey said.
“While tumbling cap projections are a positive, unfortunately, already stretched households will be seeing little benefit before July.”
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Under the energy rebate scheme, six installments of about £66 were paid monthly to bill payers from October.
It may not be all bad news as market competition could increase.
“While prices under the cap remain considerably higher than historic norms, the combination of falling wholesale prices and an increase in the energy price guarantee could see the return of competitive tariffs, and with it the chance for consumers to take back some control over their energy bills,” Dr Lowrey said.
As a result of the reduced cap and the high energy price guarantee, the amount of money paid by the government will fall. Cornwall Insights have predicted the government will save about £2.6bn as a result.
That spending on the energy price gap, however, will effectively be zero from July until the end of 2023 as Ofgem’s energy price cap is expected to fall below the government’s energy price guarantee, according to Cornwall Insights.
Ofgem announces new price caps four times a year and the July and October caps are forecast to be below £3,000. Such caps would mean there is no price difference in the amounts charged by energy companies and the amount customers pay.
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Special report: UK energy crisis
From July to September the cap will be £2,153, Cornwall Insights expects, rising in the final three months of the year to £2,161, all sums below the current £3,000 energy price guarantee.
Cornwall Insights became a prominent voice in predicting levels for the energy price guarantee’s predecessor, the energy price cap.
Business
Latest sign of struggling industry as car production falls for eighth month in a row – SMMT
UK car production has slowed, according to industry figures, in the latest sign of a struggling sector.
For the eighth month in a row UK car manufacturing fell, according to data from the Society of Motor Manufacturers and Traders (SMMT).
October saw 15.3% fewer cars roll off factory lines than the same month a year ago, meaning 14,037 fewer cars were made last month compared to October 2023.
The impact of this reduced production could be visible in the last week from the announcement of 800 job cuts from Ford UK and Vauxhall‘s Luton plant closure.
Part of the blame for the closure was placed on government electric car sales targets by Stellantis, Vauxhall’s parent company.
Pressure has been on UK car producers to meet the government’s electric car mandate.
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Govt to look into EV target mandate
Under the mandate, financial penalties are currently levied against makers if zero-emission vehicles make up less than 22% of all sales. This will rise to 80% of all sales by 2030 and 100% by 2035.
But the sales have not lived up to the targets and are less than the forecasts made at the time the 2030 target was devised. Instead of the intended 22% of all car sales being fully electric at present just 18.7% of cars are.
Following complaints from the sector facing £1.8bn in fines for missing targets and £4bn in discounts to make electric vehicles (EVs) more appealing ending in April next year, as well as longstanding calls for more support, a review into the mandate was announced.
Today’s figures show production for both the UK and for export declined, with the biggest fall (17.6%) in vehicles leaving the country.
The vast majority of vehicles (80%) are shipped abroad with half going to Europe.
Car maker problems are not unique to the UK as European manufacturers are also facing weaker EV demand than anticipated and competition from Chinese imports.
High borrowing costs and more expensive raw materials have compounded the problem.
On Friday, Bosch – the world’s biggest car parts supplier – reported the loss of 5,500 jobs, predominantly in Germany.
Less than a month ago Volkswagen revealed plans to shut at least three factories in Germany and lay off tens of thousands of staff.
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