Millions of households facing an energy bill hike today have been told to prepare for a further rise in the spring.
The increase in the energy price cap will take the typical annual bill to £1,738.
And the latest forecast suggests it will rise to £1,785 from April 1. This would be the third hike in a row and mean a £217 increase since Labour took power in July – leaving the Government at risk of breaking an election pledge to bring down the cost of energy bills.
It comes as Keir Starmer used his New Year message to vow to put ‘more cash in your pocket’.
In gloomy comments, the Prime Minister said he understood it is ‘hard’ for many to ‘think about the future when you spend all of your time fighting to get through the week’.
But critics pointed out that his message comes just weeks after Labour announced £40billion of tax rises.
The energy price hike will hit households already facing sharp cost increases early this year in everything from water bills and council tax to TV licence fees.
And it will leave Energy Secretary Ed Miliband even further from achieving his promise to cut energy bills by £300 by 2030.
Critics say Mr Miliband’s plans to switch to green energy will mean prices rise instead, as taxpayers foot the bill for the investment needed.
Meanwhile ten million pensioners are already facing a winter with less support after Labour scrapped winter fuel payments worth up to £300.
Tory energy spokesman Claire Coutinho said: ‘Ed Miliband’s net-zero zealotry will cost households billions of pounds in higher bills and taxes. Far from their election promise to cut bills by £300, we now know energy bills will go up by hundreds of pounds under Labour.’
And tax rises announced by Rachel Reeves in the autumn Budget are taking their toll.
Tory business spokesman Andrew Griffith said: ‘At a time when Labour’s Budget is hitting people’s pockets and putting jobs at risk, the rising cost of their energy policy is another blow. It is another broken promise of many from the simply false manifesto they were elected upon.’
The energy price cap is set by regulator Ofgem every three months, based on fluctuations in global gas and electricity markets. It forces energy suppliers to cut bills when global prices fall but means they can also be hiked.
The cap rose by £149 in October, and today’s hike adds a further £21 – while analysts at consultancy Cornwall Insight predict another increase in April adding £47.
The forecast comes after a rebound in wholesale energy prices – which have climbed by 20 per cent in the past two weeks – amid uncertainty over gas supplies passing via Ukraine and higher demand during a spell of cold weather in Europe.
Ofgem will announce April’s energy price cap next month.
Craig Lowrey, of Cornwall Insight, said: ‘The news of a rise in our forecast will be disappointing to households who will have been hoping for relief from recent cap rises.
‘However, the turbulence in wholesale markets – a level of volatility we haven’t seen for months – reminds us to stay cautious of predictions, which could very well increase or decrease several times before the April cap is set.
‘With a Donald Trump presidency on the horizon, and an uncertain geopolitical situation in Ukraine and the Middle East, wholesale market volatility looks set to remain.
‘To add to the wholesale turbulence, other cost measures being decided upon by Ofgem and the Government have the potential to move the cap up or down.’
The latest predictions offer one glimmer of hope for households in the longer term, with the price cap expected to come down again in July.
But it is then expected to be snuffed out as prices rise again in October.
The expected energy price cap hike in April is among several bill increases.
Homes in England and Wales will see annual water bills rise by an average of £86.
Council tax will also be up by an average of £110 from April 1. Labour had pledged in 2023 to freeze council tax bills – though the promise was not repeated in its election manifesto. TV licence fees will go up in line with inflation, lifting the price of a licence by £5 from the current £169.50 to £174.50.
Bus passengers in England will see single fares rise from £2 to £3 today as the fare cap rises for the first time since it was launched for most routes two years ago.
It comes as Sir Keir’s Government marks the end of its first half-year in office – a period in which economic growth ground to a halt.
Many businesses fear there could be worse yet to come following Ms Reeves’s £25billion raid on employer National Insurance (NI) contributions.
The Chancellor defended the move by saying it did not directly affect working people – but it broke an election promise not to put up NI.
Employers say the extra cost will mean lower pay rises for staff, fewer jobs and higher prices for customers.
Official figures show the economy flatlined in the third quarter of 2024 and the Bank of England said the final three months of the year also saw zero growth.
