MPs denounce government’s energy bill support package as inadequate

The BEIS Select Committee has been told the “worst is yet to come” regarding the energy crisis

Big Zero Report 2022

Warnings about the need to update the current energy bill support package have been made to government ministers.

This follows repeated forecasts in recent weeks that the default tariff cap could rise to £3,363 a year in winter.

A new report by the Business, Energy and Industrial Strategy Committee calls on the government to “immediately update” its package of support to help households with skyrocketing energy bills before the cost of living crisis grips even harder in October.

MPs suggest the government’s Energy Bills Support Scheme provides a £400 discount on energy bills in October for every household, a £650 means-tested one-off payment to eight million low-income households, £150 for those on disability benefits and £300 for pensioners.

This was designed when the forecast for the October price cap was £2,800.

The committee warns the size of the package has been ‘eclipsed by the scale of the crisis’.

The report also suggests “negligent” energy regulator Ofgem enabled now bankrupt energy firms and inexperienced bosses to increase energy bills further for customers.

BEIS Select Committee Chair Darren Jones said: “Once again, the energy crisis is racing ahead of the government. To prevent millions from dropping into unmanageable debt it’s imperative that the support package is updated and implemented before October when the squeeze will become a full-on throttling of household finances and further tip the economy towards recession.

“We were told by a number of witnesses, ‘if think things are bad now, you have not seen anything yet’. This winter is going to be extremely difficult for family finances and it’s therefore critical that public funds are better targeted to those who need it the most.”

A BEIS spokesperson told ELN: “No national government can control global inflationary pressures; however, we have introduced an extraordinary package of support to help households, including £1,200 each for the most vulnerable households.

“We are also investing £6.6 billion this Parliament to improve the energy efficiency of homes, delivering savings of £300 a year on average.”

Responding to the BEIS Committee’s report, an Ofgem spokesperson said: “While the unprecedented rise in global gas prices would have resulted in market exits under almost any regulatory system, we have been clear and transparent about the fact that suppliers and Ofgem’s previous financial resilience regime were not robust enough.

“This contributed to some of the supplier failures since August 2021. No regulator can, or should, guarantee companies will not fail in a competitive market but we are working hard to reform the entire market, as well as closely scrutinising and holding individual energy suppliers to account, to further strengthen the regulatory regime.

“We commit to working closely with the committee, government and industry to make sure the balance of trade-offs across the board are carefully considered so that customers are prioritised throughout the current crisis and they have access to the government support they are entitled to.

“We are also working with all parts of government and industry on the long-term solution to the energy crisis by moving us away from imports of expensive gas towards a more secure, reliable, home-grown energy system.”

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