Families are facing another major squeeze on household finances after Ofgem confirmed energy bills will rise sharply from July, adding more than £220 a year to the average household’s costs.
The increase comes at a time when many households are already struggling with rising mortgage payments, food prices and council tax bills, with charities warning the latest jump could push more families into debt ahead of winter.
Under the new Ofgem price cap, the average annual dual fuel bill for households paying by direct debit will rise by 13 per cent to £1,862 between July and September. That equates to around £18 extra per month if prices remain at the same level for a year.
The rise is the steepest since the 2022 energy crisis and higher than many analysts had expected. Consultancy Cornwall Insight had forecast an increase of around £209 before the regulator confirmed the final figure.
Ofgem said the increase had been driven largely by surging wholesale gas prices following escalating tensions in the Middle East, including disruption around the Strait of Hormuz, one of the world’s busiest oil and gas shipping routes. Oil prices have climbed sharply in recent months, with Brent crude approaching $100 a barrel amid fears over global energy supplies.
While ministers insist the latest rise is primarily the result of global instability, the increase has reignited debate over Britain’s longer term energy strategy.
Energy Secretary Ed Miliband described the increase as “deeply unwelcome” and said the long term solution was to move “further and faster” towards clean, homegrown energy.
Mr Miliband said:
“The rise in the price cap because of a war we did not choose is deeply unwelcome news for households across the country.
“We know people were under pressure before this crisis, and that’s why easing that burden is our number one priority.”
Labour has pledged not to issue new North Sea oil and gas exploration licences, arguing that renewable energy and nuclear power offer the best route towards lower bills and long term energy security.
However, critics say Britain remains heavily dependent on gas for both heating and electricity generation, meaning households are still vulnerable whenever global prices rise. They argue reducing future North Sea development before alternatives are fully established risks increasing dependence on imported energy.
Conservative leader Kemi Badenoch said:
“Energy bills are rising again. Labour will blame Iran, but you’re paying more because of Ed Miliband’s net zero taxes and refusal to drill our own oil and gas.
“Our Cheap Power Plan would cut bills by 20 per cent by scrapping the green taxes, scrapping VAT and drilling in the North Sea.”
Critics also say Britain is increasingly out of step with countries such as Norway, which continues to expand North Sea oil and gas production while using energy revenues to strengthen public finances and protect consumers from price shocks.
Senior Conservatives have argued Britain should “use the resources on our own doorstep” during the transition to greener energy rather than becoming more reliant on imported fuel from overseas markets.
The UK already faces some of the highest electricity costs in Europe. Research from the House of Commons Library found British electricity prices were above the EU average even before the latest increase. Separate analysis by Full Factfound UK domestic electricity prices were among the highest in Europe.
Figures cited by Ofgem show wholesale gas prices have risen by more than 50 per cent since conflict in the Middle East intensified earlier this year.
Debt charities warned the latest increase would worsen financial pressures on already stretched households. National energy debt has climbed to almost £4.6 billion, while StepChange said some families are already spending more than a fifth of their income on energy costs alone.
There are also concerns prices could rise again later this year. Cornwall Insight predicts the annual cap could climb to £1,899 in October, just as colder weather increases demand and households begin turning heating systems back on.
Ofgem chief executive Tim Jarvis warned that elevated prices could continue into winter and encouraged consumers to consider fixed tariffs where possible.
For many families already struggling to make ends meet, the latest increase is likely to deepen concerns over how household budgets will cope in the months ahead.
What do you think? Should Britain reopen new North Sea oil and gas licences to reduce reliance on overseas energy markets, or should the Government continue accelerating the move towards renewable energy? Let us know your views.
