Millions of people face ‘unmanageable’ debt on their electricity bills unless the Government urgently offers more help, MPs warn

Rising energy prices will plunge millions of people into “unmanageable” debt this winter unless the Government urgently overhauls support for families struggling to make ends meet, MPs have warned.

The government has been urged to consider introducing a “welfare tariff” to help vulnerable people cope with the huge the cost of energy is risingas experts predict the price cap will reach £3,244 for the average house by October.

MPs on the influential business select committee said energy regulator Ofgem was “negligent” and called for an immediate review financial support on offer to people.

It said ministers should consider scrapping the much-criticised energy price cap and replacing it with subsidized tariffs for people most in need.

The new tariff will set the amount vulnerable households pay for their bills, rather than setting a maximum price per unit for gas and electricity like the current price cap.

MPs on the committee highlighted problems with targeted support already announced by former chancellor Rishi Sunak, which meant people with multiple properties received multiple payments.

Relatively well-off retirees without mortgages also benefited, while some poorer families lost out, the committee noted.

However, the biggest problem then was that the payments were simply inadequate, according to the committee.

When Mr Sunak announced the support, energy prices were forecast to rise to around £2,800 in October. It is now forecast to reach £3,244.

The committee then also called for a mass action to insulate houses to reduce bills.

“Once again the energy crisis is ahead of the government,” said Darren Jones, chairman of the business, energy and industrial strategy committee.

“To prevent millions from falling into unmanageable debt, it is vital that the support package is renewed and implemented before October, when the squeeze becomes a complete squeeze on household finances and pushes the economy further into recession.”

The committee has been hearing from experts, ministers and industry insiders for months.

“Several witnesses told us, ‘If you think it’s bad now, you haven’t seen anything yet,'” Mr Jones said.

“This winter will be extremely difficult on family finances, so it is vital that public funds are better targeted at those who need them most.”

Earlier this year, Mr Sunak announced a support package which gave electricity bill discounts of £400 for all households, £650 for another eight million low-income households, £150 for those who are receiving Disability Allowance and £300 for pensioners.

The committee accused Ofgem of “years of incompetence” which allowed poorly managed and supported companies to set up energy companies.

When a supplier fails, part of the cost of fixing its failure is spread across all households in the UK.

“Ofgem failed to use its existing powers and take action against energy suppliers even when it was clear that they should have done so,” the committee said.

It added: “Negligent energy regulator Ofgem has allowed now-bankrupt energy companies and inexperienced CEOs to drive up energy bills even further.”

Ofgem said the huge spike in gas prices “would have led to market exits under almost any regulatory system”, but admitted its previous regime was “not robust enough” and had contributed to the failure of some suppliers.

“No regulator can and should ensure that companies don’t fail in a competitive market, but we are working hard to reform the entire market and scrutinize and hold individual energy providers accountable to further strengthen the regulatory regime,” it said. . said.

The Department for Business, Energy and Industrial Strategy (Beis) said: “No single national government can control global inflationary pressures; however, we have introduced an extraordinary support package to help households.”

MPs also concluded that while the government can step in with support now that gas bills are soaring, it needs to reduce energy demand in the long term.

Britain has some of the worst home insulation in Europe and a major modernization program could not only cut electricity bills but also help the country meet its climate change targets.

A fully funded national campaign to insulate homes “street by street, community by community” is needed, the committee said.

Mr Jones said: “At the end of the day, ministers know that the long-term solution is to reduce our energy needs through insulation work that keeps our homes warm in winter and cool in summer.

“If the government is really serious about this energy crisis and the country’s zero performance, it will come up with a bold, fully funded national home warming program by the end of the year.”

Millions of people face ‘unmanageable’ debt on their electricity bills unless the Government urgently offers more help, MPs warn

Source link Millions of people face ‘unmanageable’ debt on their electricity bills unless the Government urgently offers more help, MPs warn

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