Consumer champion Martin Lewis has urged Rishi Sunak and Liz Truss to put the Tory leadership contest aside to help households after warnings the energy price cap could hit £4,200 in January.
Speaking ahead of tonight's hustings in Darlington, the Money Saving Expert’s used a thread on Twitter to warn that the change “will leave many destitute” and recent promises from Conservative leadership candidates to cut green levies will not be enough.
Read more: Rishi Sunak and Liz Truss to go head to head in Darlington hustings tonight
In a new dire outlook for households, Cornwall Insight said bills are set to soar to around £3,582 in October, from £1,971 today, before rising even further in the new year.
Ofgem is set to put the price cap at £4,266 for the average household in the three months from the beginning of January.
The energy consultancy said this is around £650 more than its previous forecast.
It comes after Ofgem last week announced changes to the way in which it calculates the price cap on energy bills.
Mr Lewis said: “The leadership debate must not ignore this portentous national cataclysm any more.
"They are all in the same party – let’s call on them to come together for the good of the nation rather than personal point-scoring.
"The excuse "we need to wait for Ofgem figure" doesn't wash. In May government asked Ofgem for forward guidance & made plans based on that. It can do the same now."
Craig Lowrey, principal consultant at Cornwall Insight, said: “While our price cap forecasts have been steadily rising since the summer 2022 cap was set in April, an increase of over £650 in the January predictions comes as a fresh shock.
Tragic news
— Martin Lewis (@MartinSLewis) August 9, 2022
The latest @CornwallInsight prediction, based on Ofgem's new methodology, is an 81% price cap rise in Oct (taking typical bill to £3,582/yr) and a further 19% in Jan (so £4,266/yr)
Action & planning is needed now. The zombie govt needs wake up sooner than 5 Sept...
“The cost-of-living crisis was already top of the news agenda as more and more people face fuel poverty – this will only compound the concerns.
“Many may consider the changes made by Ofgem to the hedging formula, which have contributed to the predicted increase in bills, to be unwise at a time when so many people are already struggling.”
Read more: Rishi Sunak and Liz Truss - Don't turn your back on the North
However, he also defended Ofgem’s decision, which will hopefully lead to lower bills in the second half of next year.
This will happen because Ofgem is making it easier for energy suppliers to recover their costs. By doing this, fewer suppliers will fail – and the cost of those failures will not need to be passed on to customers.
“With many energy suppliers under financial pressure, and some currently making a loss, maintaining the current timeframe for suppliers to recover their hedging costs could risk a repeat of the sizeable exodus seen in 2021,” Dr Lowrey said.
“Given that the costs of supplier failure are ultimately met by consumers through their energy bills, a change which means that this is less likely is welcome, even if the timing of it may well not be.”
Part of the increase in the forecast is also due to rising wholesale energy prices, Cornwall said.
Ms Truss and Mr Sunak will come up against each other in another hustings showdown in front of Conservative party members as the pair visit the region for the first time on their UK tour.
Darlington will once again host the leadership debate, as it did in 2019 between Boris Johnson and Jeremy Hunt, at 7pm.
Read next:
- Rishi Sunak and Liz Truss reveal pitch to the North East as they fight to become new PM
- What Rishi Sunak would do for the North East if he became Prime Minister
- What Liz Truss would do for the North East if she became Prime Minister
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