“This is a hugely unsettling time for millions of energy customers,” said Dame Clare Moriarty, chief executive of Citizens Advice.
“It’s particularly worrying for many on the lowest incomes who’ll be facing the double whammy of rising fuel bills and a benefits cut.
“With choppy waters ahead, the single best thing the government can do is keep its lifeline of £20-a-week to universal credit.”
Nearly four million UK households are already behind on their energy bills, according to the End Fuel Poverty Coalition, and the price hike will push about 488,000 into hardship.
The energy cap rise would come “at the worst possible time for millions of households across the country”, a spokesperson for the organisation said.
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It was “difficult to put into words just how devastating” the rise will be for struggling families, they added, warning low-income households on pre-pay meters would be most at risk of “facing the stark choice between heating and eating”.
The fuel bills increase will most affect those “hit hardest by the impacts of Covid and lockdown,” said William Baker from Solutions to Tackle Energy Poverty, urging the government to scrap the universal credit cut.
Energy company Bulb, which is the country’s sixth largest provider and has 1.7m customers, announced on Monday that it was seeking a government bailout to avoid going bust.
A handful of smaller energy suppliers have already folded, including Utility Point and People’s Energy. British Gas agreed to take on 350,000 customers from the latter.
Green, an energy provider with around 250,000 customers, announced it is facing administration and in talks with insolvency advisers.
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The number of UK energy companies could dwindle from around 70 to just 10 by the end of the year if the gas price crisis does not improve, experts warned. But Business Secretary Kwasi Karteng said failing suppliers were unlikely to get government bailouts.
“I do not think it’s the right thing for taxpayers’ money to be injected into companies that have been badly run,” he said, but suggested the government could give loans to larger companies absorbing customers from suppliers which have folded.
But he insisted ministers would support vulnerable families facing fuel poverty, adding: “There is absolutely no question of the lights going out or people being unable to heat their homes.”