Jeremy Hunt is under increasing pressure to cancel a planned cut in energy bill support as research has shown heating and energy payments will “eat” nearly 10% of workers’ wages after the switch in April.
So far, the chancellor has resisted calls to abandon the change to the energy price guarantee, which will raise the ceiling on the typical annual household bill from £2,500 to £3,000.
However, analysis by the Trades Union Congress shows that monthly bills are expected to hit £250 from April – almost 10% of the UK monthly salary of £2,589 – up from £208 a month currently.
After the cut in support, the amount of monthly earnings spent on energy would be more than double the £107 per month normally paid in March last year.
The energy price guarantee was introduced by then Prime Minister Liz Truss last year, who promised Britons that annual bills for a typical home would be capped at £2,500 for two years.
Hunt later made the policy less generous, with a limit of £2,500 for six months until April, rising to £3,000 for a further year.
Bills are expected to be up to 40% higher than last year from April, because of the reduction in support and also because the £400 one-off payment announced by then-Chancellor Rishi Sunak last spring will not be replicated this year. .
TUC Secretary General Paul Nowak said: “The government should cancel its impending increase in domestic energy bills in next month’s budget. Families across Britain are being stretched to the limit by sky-high bills.
“That means imposing an unexpectedly higher tax on greedy oil and gas suppliers. And that means raising wages across the economy.”
The TUC joins consumer advocate Martin Lewis and 70 organizations in calling for the increase to be scrapped. In a letter to Hunt sent earlier this month, Lewis said: “The damage to people’s pockets and mental health from another round of energy price hike letters is disproportionate.”
The National Energy Action predicted that the number of households with fuel shortages will increase from 6.7 million to 8.4 million as of April if the price guarantee increase is implemented.
On Monday, Ofgem will confirm its maximum price level for the three months from 1 April. Expected to drop around £1,000 to just under £3,300. The energy price guarantee means that typical bills should not reach this level, but the threshold is used to calculate the cost of covering government bills.
Consultancy Cornwall Insight estimated that cutting £500 in how much of the typical bill is covered by the energy price guarantee would save the government £2.6 billion.