Ministers are facing growing pressure to find a solution to the cost of living crisis engulfing Britain. Added to inflation rising, the end of the furlough scheme and the scrapping of the temporary uplift in Universal Credit, a rise in energy prices means Britons are facing a tough winter.
Business and Energy Secretary Kwasi Kwarteng is holding regular meetings with industry leaders to try and find a solution to the energy price crunch.
Global wholesale energy prices have skyrocketed in recent weeks, forcing the collapse of a number of small suppliers.
The price cap introduced in 2019 means domestic suppliers are currently being forced to provide energy for a lower rate than it is costing them to purchase.
The price cap was put into law by Theresa May’s Government in a bid to protect customers from being exploited by energy companies through high tariffs.
READ MORE: Thousands at risk as ANOTHER energy firm goes under
Wholesale gas prices from the previous six months are used to determine the level of the cap.
It means from the start of this month household were faced with a record cap of £1,277 a year.
However, as the price of wholesale gas continues to sharply rise, a further increase is expected next spring.
Research firm Cornwall Insight estimates the industry regulator, Ofgem, will increase the cap to as much as £1,660.
The below chart highlights how the estimated rise will represent an eye-watering increase of more than 60 percent in just 18 months.
Back in the summer of 2020, the cap was placed at its lowest ever rate at £1,042 a year.
READ MORE: ‘Weatherman’ Kwasi Kwarteng says mild winter could fix gas prices
Since September 12 energy companies have gone bust due to increasing costs.
It means around two million households have been forced to move to new companies through the so-called Supplier of Last Resort.
The UK is not the only country struggling with the cost of energy.
Many countries in Europe are also suffering from the expensive price of purchase.
The Department for Business, Energy and Industrial Strategy said ministers and officials are engaging with industry “to further understand and to help mitigate the impacts of high global gas prices”.
Labour has accused the Government of “hiding” over the issue and failing to get a grip of the situation.
Sir Keir Starmer said: “They’ve put their out-of-office on.
“Whilst other countries step up and act, the UK is staggeringly complacently sitting back.”