Energy bills will cost UK households two months’ wages next year unless government intervenes, TUC warns

The price cap on energy bills could top £5,000 next year, according to the bleakest forecast yet

Energy bills are forecast to cost UK households more than two months’ wages next year unless the government intervenes, the TUC has warned.

Average take home pay after tax will be £2,054 per month in 2023, according to the union, meaning that two months’ worth will be less than the £4,200 predicted cost of energy bills per household.

The price cap on energy bills could top £5,000 next year, new forecasts suggest (Photo: PA)
The price cap on energy bills could top £5,000 next year, new forecasts suggest (Photo: PA)
The price cap on energy bills could top £5,000 next year, new forecasts suggest (Photo: PA)

The TUC is urging ministers to consult with trade union and business leaders to devise an urgent response to the crisis and said the approach should be similar to measures taken during the Covid pandemic when the furlough scheme was rolled out.

The union has called for a series of measures to tackle rising energy costs, including stopping the October energy price cap increase, bringing forward the annual increase in the national minimum wage from next April to October, and funding pay rises for public sector workers that keep up with inflation.

TUC General Secretary Frances O’Grady argued that no one should struggle to get by in one of the richest countries in the world.

She said: “Up and down the country, millions of families are being pushed to the brink by eye watering energy bills. With prices set to skyrocket even further, it’s time to say enough is enough.

“Boris Johnson, Liz Truss and Rishi Sunak need to wake up to the size of this crisis. This requires a pandemic-scale intervention.

“Ministers must cancel the catastrophic rise to energy bills this autumn, and to make sure energy remains affordable to everyone, they should bring the energy retail companies into public ownership.

“Ministers should also act to boost pay – as well as Universal Credit, pensions and the minimum wage by bringing forward planned increases to October, and they should fund it through a bigger windfall tax on the obscene profits of energy giants.

Ms O’Grady added that without a long-term plan to prevent a similar living standards emergency, the country will keep “lurching from crisis to crisis”.

How much are energy bills set to rise?

The cost of an average household’s annual energy bill could reach nearly £5,300 from April if current wholesale prices for gas and electricity do not fall soon.

In a new forecast, models designed by experts at energy consultancy Auxilione predict that the price cap on energy bills could reach £3,628 in October, up from £1,971 today.

The cap could then rise again to £4,538 in January and peak at £5,277 in April.

It marks the latest in a series of progressively dire forecasts which continue to rise because the price of gas and electricity on wholesale markets keeps going up.

The April forecast, which was made on Friday morning (12 August), is £240 more expensive than the previous prediction for the same month, made just 24 hours earlier.

The figure given for the price cap is based on what an average household uses. Those who use more than average will have to pay more, and those with less usage will face smaller bills.

The cap is based on the price that suppliers pay to buy energy which they then sell on to households and it is changed four times a year, in October, January, April and July.

Most of the observation window for October’s price cap has now passed, so forecasters are confident that their predictions will not be far off when Ofgem announces the cap level on 26 August.

The latest prediction will pile further pressure on politicians to act, with Conservative leadership candidate Rishi Sunak promising on Thursday (1 August) to save all households around £200 by cutting VAT on energy.

Mr Sunak also promised more targeted help for vulnerable households, but said he would confirm how much support when the October price cap is finalised later this month.