Prepare for 'significant' rise in energy bills: Ofgem chief confirms price cap ...

Prepare for 'significant' rise in energy bills: Ofgem chief confirms price cap ...
Prepare for 'significant' rise in energy bills: Ofgem chief confirms price cap ...

Ofgem today warned there will be a 'significant rise' to the cap on energy bills - hitting millions of Britain's poorest people. 

The energy crisis has been blamed, in part, on a shortage of natural gas caused by Vladimir Putin allegedly 'choking' supplies to Europe to pressurise regulators into approving the controversial Nord Stream 2 pipeline.  

Today Boris Johnson waded into the row, branding the link a threat to energy security and suggesting the decision to bypass Ukraine to bring supplies direct to Germany would damage the Ukrainian economy. 

A No 10 spokesman said: 'Although Nord Stream 2 will not directly impact the UK's energy security, it could have serious implications for central and eastern European countries. 

'Some European countries are nearly wholly dependent on Russian gas, which raises serious concerns about energy security.'  

In comments reported by The Times, the spokesman also warned about the damage to Ukraine, which currently hosts the largest pipeline network for Russian gas and benefits from large transit fees. 

He added: 'Nord Stream 2 would divert supplies away from Ukraine, with significant consequences for its economy.' 

Experts believe soaring energy prices could push average annual bills through the £2,000 barrier for the first time. As the gas crisis escalated, industry analysts suggested the current energy cap of £1,277 would rise by as much as £800.

Ofgem chief executive Jonathan Brearley, didn't put a figure on it, but said there will be a 'significant rise' in the price cap set by the industry regulator which helps to control the cost of gas and electricity in the UK. He didn't knock back claims that fixed and other deals could reach £2,000 in 2022.

'We can't predict everything, and the wholesale market, as we've seen, has gone up and down extremely quickly so we can't predict fully what that will be,' he told BBC Radio 4's Today programme. 'But, looking at the costs that are in the system, we are expecting a significant rise in April.'

But Mr Brearley added that the current price cap will remain until April. 'We have no plans to raise the price cap before April,' he said.

As Britain faced the prospect of soaring bills as the energy crisis continues to tighten its grip, it emerged -

Jake Sullivan, the US national security adviser, said the White House wants to work with Europe to ensure that energy supply keeps up with rising demand; 'Russia has a history of using energy as a tool of coercion, as a political weapon,' he said. 'Whether that's what's happening here now is something I will leave to others';  Baked beans became the latest victims of soaring inflation - with the head of manufacturer Kraft Heinz today revealing the cost of the breakfast staple will have to go up;  The National Grid prompted fears of blackouts with a warning over electricity supplies this winter, and more energy firms were expected to collapse, with customers being switched to suppliers charging higher tariffs; It was claimed the UK would become more reliant on dirty coal to keep the lights on, just as it hosts a UN climate change conference; Experts warned that Britain faced an inflation shock that would squeeze family finances and could derail the economic recovery; One City analyst said inflation was heading to levels not seen for 30 years, while a think-tank warned of a big increase in council tax; The National Energy Action said up to 1.5 million more households could be plunged into fuel poverty if the energy cap soars; Boris Johnson faced a Cabinet backlash over his war with business, with five ministers telling the Daily Mail they wanted the PM to adopt a more 'pragmatic' approach;   Industry chiefs said the switch to 'greener' petrol last month was a 'contributory factor' to the recent fuel crisis.

Vladimir Putin has been accused of holding Europe to ransom in a bid to win approval for his Nord Stream 2 pipeline.

Boris Johnson has waded into the row and branded the proposed link from Russia to Germany a threat to security

Vladimir Putin has been accused of holding Europe to ransom in a bid to win approval for his Nord Stream 2 pipeline. Boris Johnson has waded into the row and branded the proposed link from Russia to Germany a threat to security 

Experts claimed Putin was using the crisis as leverage over the Nord Stream 2 pipeline project, which is run by Gazprom. Pictured: An output filtration facility of a gas treatment unit at the Slavyanskaya compressor station

Experts claimed Putin was using the crisis as leverage over the Nord Stream 2 pipeline project, which is run by Gazprom. Pictured: An output filtration facility of a gas treatment unit at the Slavyanskaya compressor station

The surge in wholesale gas prices has already forced many small suppliers in the UK out of business

The surge in wholesale gas prices has already forced many small suppliers in the UK out of business

School dinner choice is slashed and staff told to stockpile 'long-life, dried, tinned and frozen food' amid fears suppliers will struggle to keep children fed with shortages this winter 

School dinner choices are being slashed and staff advised to stockpile essential food supplies amid fears suppliers will struggle to keep children properly fed this winter.

ISS, one of the UK's largest canteen suppliers, has reportedly told 450 schools it is having issues with 'sourcing, packing and distribution', predicting that the problem will 'get worse' over the winter and will continue until February.

School canteens were advised by ISS in an email to stockpile 'long life, dried, tinned and frozen' products to make sure children can still be fed in a 'worse case scenario' this winter, according to ITV News.

Meanwhile, food wholesaler BidFood has warned that it is experiencing 'significant' supply pressures and struggling to recruit HGV drivers, blaming the issues on the Covid-19 pandemic and Brexit.

In Lancashire, thousands of pupils are being offered a reduced menu, The Times reported.  

'One school this week has not had a delivery of sandwiches. Another, no soup was sent. One school cook has even reported going out and purchasing additional items out of her own money as she was concerned about the choices on offer,' Samara Barnes, a Labour councillor, told Lancashire Live.

'This is a grave concern, especially given the fact that we know some children rely on their school dinner as their only meal of the day.'

 

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Experts said the Russian president had substantial scope to boost gas supplies to the West – but he was using the issue as leverage in a bid to win approval for a new pipeline.  

The surge in wholesale gas prices has already forced many small suppliers in the UK out of business.

Business Secretary Kwasi Kwarteng last night insisted there would be no bailout for failing firms, adding that the Government's plans to decarbonise the UK's power supply would protect customers in the long term.

Last night Ofgem appeared to open the door to a rethink on the way the cap works, with chief executive Jonathan Brearley saying: 'Although the gas price rise is unprecedented today, we will need to plan on the basis that shocks like this could happen again.' 

The current energy bill price cap is set at £1,277 a year based on typical use, but industry analysts suggest it could rise by anything from £500 to £800 next April, based on the current market. 

Mr Brearley has made clear that a dramatic surge in gas prices, which leapt 60 per cent at one stage this week, will push up bills when the cap is reviewed. Some energy firms have been pushing for the cap to be ditched entirely or raised much sooner.

Mr Brearley said: 'For millions of households the price cap has played its part in mitigating the consequences of the current gas price rises. 

'But it is designed to reflect fair costs and therefore will need to adjust over time to reflect the changes in fuel costs that we are seeing today.

'It is hard to predict how long gas prices will stay high, but we do expect significant upward pressure on prices.' 

Industry analyst Dr Craig Lowrey, of Cornwall Insight, said prices were likely to stay at a record high through to next winter and beyond.

The National Grid says the gap between energy supply and demand this year is likely to be at its lowest level for six years. 

The organisation said it was confident blackouts can be avoided, but government energy adviser Tom Edwards said: 'If we have a very cold winter there is a chance of blackouts.

'We are reliant on imports from other countries and if the flows are not forthcoming then as a country we will have to take action to reduce demand.

'Some large industrial companies like car manufacturers may have to turn off.'

 

Exclusive research for the Daily Mail by the Centre for Economics and Business Research (CEBR) also yesterday revealed how inflation will cost the typical family of four an extra £1,800 by the end of this year. Meanwhile, a retired couple can expect to see living costs rise by more than £1,100, and a lower income couple could be stung by nearly £900

Exclusive research for the Daily Mail by the Centre for Economics and Business Research (CEBR) also yesterday revealed how inflation will cost the typical family of four an extra £1,800 by the end of this year. Meanwhile, a retired couple can expect to see living costs rise by more than £1,100, and a lower income couple could be stung by nearly £900

Analysis of price rises in the last year shows the cost of a second-hand car has risen more than £1,600, a tank of fuel is up more than £10 and the price of a pint of beer is creeping close to £4

Analysis of price rises in the last year shows the cost of a second-hand car has risen more than £1,600, a tank of fuel is up more than £10 and the price of a pint of beer is creeping close to £4

Today, baked beans became the latest victims of soaring inflation - with the head of manufacturer Kraft Heinz today revealing the cost of the breakfast staple will have to go up.  

A supply chain crisis and dramatically spiking energy prices are combining to threaten to push up the price of ordinary goods ranging from food and toilet rolls to bricks and chemicals.    

'In previous years there was inflation in coffee because of a bad crop or a bad crop in beans - what is different now is that this inflation is across the board,' he told BBC Radio 4's Today programme. 

'So it's impossible to navigate through this moment of inflation without increasing prices. It's up to us, and to the industry and to other companies to try to minimise these price increases.' 

Major industrial groups say soaring prices are already forcing some heavy industries, such as steel, fertiliser and brick manufacturers, to scale back production and, potentially, shut down.

They are calling for government support of the kind that was given to banks during the 2008 financial crash.

Mr Kwarteng said last night: 'Protecting consumers from rising global gas prices is my top priority.' 

Soaring energy bills, paying more at the pump, NO food and empty shelves – how millions are being clobbered by rising cost of living that will leave them THOUSANDS out of pocket 

Energy bills  

Millions face a looming winter energy crisis and a warning that gas and electricity bills could surge by an extra £500 a year. 

A shock 60per cent surge in wholesale gas prices at the beginning of this week - on top of earlier increases of 600% since January.

National Grid has also warned of tight electricity supplies as the amount of energy from renewable sources such as wind, dropped.

The current UK energy price cap, set by industry regulator Ofgem, is £1,277 – but analysts Cornwall Insight predict it will rise to £1,660 when it is reviewed on April 1. Today the cheapest fixed gas and electricity deal available in the UK is £1,700 - a month ago it was £1,177.   Experts believe households will pay £500 to £800 more for energy in 2022.

The cost of energy is also hitting industry, who say they will have to pass it on to customers with it likely to hit products like cars, building materials, chemicals and even toilet rolls. 

Fuel prices

Petrol prices have soared to an eight-year high last month as filling stations cashed in on the fuel crisis.

Average pump prices hit 136.8p a litre for unleaded – 22p more expensive than in September 2020. It meant the cost of filling the typical 55-litre tank in a family car was £12 dearer than a year ago, said the RAC.

Separately, an AA study found some forecourts are currently charging up to 163.5p a litre for unleaded – 27p above the average. This would add a further £15 to the cost of filling up.  

House prices

Growth in British house prices gathered speed in September when they rose by 1.7% from August, mortgage lender Halifax said on Thursday.

In annual terms, house price growth also accelerated to 7.4% from 7.2% in August. The average price of a detached home has surged by £41,000 over the past year as buyers have searched for more space, the research found. 

Taxes 

Council tax may need to rise by up to 5 per cent a year for the next three years to keep services running and pay for social care reforms.

That would add £299 on to the average council tax bill for a Band D household.

The Institute for Fiscal Studies said that under current government spending plans, a rise of at least 3.6 per cent on council tax bills will be needed per year just for town halls to keep services running at the levels seen before the coronavirus pandemic.

Such a rise would come on top of the 1.25 per cent increase in National Insurance announced last month. 

Supermarket food shop

The average household spent £277 a month on food expenses, but the latest inflation reading suggests this could increase to £285 a month this year. 

Analysis by MailOnline of prices today compared to those in March 2020 found many staple goods have gone up in cost include mushrooms, spring onions, cabbage, salmon, soup, kiwi fruit, apples and mineral water. 

Among the biggest price rises are eggs, sausages, fizzy drinks, fruit and bottled water; 

Price of a pint

The average price of a pint in the pub across the country could soon pass £4, the ONS has said. In London the price is already through that barrier.   

And the other factors driving price rises....  

Inflation

Prices are rising at the fastest pace in at least a quarter of a century as businesses pass on the costs of labour, materials, shipping and energy to consumers.

Firms in the services sector, which range from transport companies and hairdressers to pubs and restaurants, hiked their prices in September at the fastest rate since data began in 1996, according to the Purchasing Manufacturers' Index (PMI) from IHS Markit.

Manufacturers are also putting up prices as inflation once again stalks the global economy.

Inflation hit 3.2pc in August and is widely expected to surge past 4pc by the end of the year in a headache for Chancellor Rishi Sunak.

HGV crisis 

Britain is struggling to deliver good and move items die to a shortage of drivers. Large numbers have retired and some have returned to the EU because of covid and Brexit. 

The Government has set out an action plan over the weekend to address lorry driver shortages, currently running at 100,000 in the UK and 400,000 on mainland Europe.

It will see 5,000 temporary visas made available to foreign HGV drivers, while a £10million skills plan will help train 4,000 more truckers.

This week sources claimed only 27 drivers had applied for a new visa - but Boris Johnsons insisted it was 127. At the same time, tens of thousands of Britons were unable to take HGV driving lessons and tests during the lockdowns, which means the UK has missed out on a generation of skilled recruits.

Cost of materials

Wholesale gas prices have soared to record highs across Europe while the price of oil has almost doubled in the past year to close to $83 a barrel – the most expensive since 2018.

Copper has jumped by more than a third over the past year which, when combined with the shortage of semiconductors, will bump up the prices of electrical products. And cotton has also spiked above $1 a pound for the first time in more than a decade, rising more than 42pc over the past year, which could mean more expensive clothes.

Even arabica coffee has jumped almost 73pc over the past year to levels not seen since 2014, meaning Britons could soon be feeling the pinch when visiting their local cafe.

Disrupted global supply chain 

The cost of bringing in container loads of supplies, including festive products, from China has soared this year.  There has also been a major issue with containers being stuck in Europe rather than in Asia as shipping was disrupted by covid. It means that UK companies are struggling to get products made and shipped easily with long waiting times.   

Food shortages 

Farms are pouring milk down the drain at the same time as McDonald's and supermarkets cannot get supplies due to the lorry driver shortage.

There are not enough tanker drivers to collect milk from farms, while the dairies have too few delivery drivers to transport supplies to high streets.

At the same time, farmers are complaining that a chronic lack of workers to pick and pack crops means fresh produce is being left to rot in the fields.

Supermarkets are having to concentrate on moving fresh products rather than many dry goods because of a lack of trucks.  

Pig farmers have started culling livestock amid warnings from food firms the drastic measures will hit key ingredients.

Meat industry leaders say a lack of skilled butchers means abattoirs are refusing to accept pigs for slaughter, leading to fewer pork products and reduced choice.

This is expected to hit supplies of gammons and pigs in blankets in the run-up to Christmas.

The National Pig Association (NPA) and National Farmers' Union (NFU) are warning that tens of thousands of pigs - possibly 120,000 - may have to be culled on farms and incinerated.

Labour shortages 

Businesses have complained about difficulties recruiting staff from HGV drivers to baristas and warehouse workers.

But latest figures show unemployment stood at 1.55million at the end of July.

That was before the end of the furlough scheme this month which analysts believed could have put as many as 250,000 on the dole queue.

Critics say bosses have come to rely on uncontrolled

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