‘Black Thursday’ for Brits as energy bills and interest rates soar
Rishi Sunak pledges support after cost of living ‘double whammy’ hits millions
Millions of households across the UK will face fuel poverty and more financial hardship after being hit with a cost of living “double whammy”.
On a day that has been widely described as “Black Thursday”, it was announced at 11am by Ofgem that the energy price cap would increase by a record 54% to £1,971 on 1 April – an average increase of £693 for 22m households.
Within an hour, the Bank of England then confirmed that interest rates will go up from 0.25% to 0.5% – “making mortgages and other debt more expensive”, the BBC said.
As the “stark reality on energy bills became clear”, Rishi Sunak immediately set out a £9.1bn package to “soften the blow” for families already facing a hike in National Insurance from April and soaring inflation, the London Evening Standard reported. Ahead of a Downing Street press conference later today, the chancellor outlined the main elements of the Treasury support package which will aim to “take the sting” out of the significant price shock.
Sunak announced that the “vast majority” of households will receive £350 to help tackle rising energy bills. Around 80% of all homes in England will get a £150 discount on their council tax bill in April and from October a £200 energy bill rebate will be applied for all homes in England, Wales and Scotland.
Millions face fuel poverty
With energy and mortgage bills set to soar over the coming year, it’s a cost of living “double whammy” that will shock millions of people, the Standard said.
In terms of energy costs, the “worst is yet to come”, said Sky News business correspondent Paul Kelso. The energy price cap increase by Ofgem is “every bit as bad as feared” and the impact will be felt by “all but the most affluent households” and “acutely by the least well-off”.
It’s the second major increase in energy bills in six months – and the largest on record, The Guardian reported. The impact is “expected to drive millions of households into fuel poverty for the first time”.
The ‘heat or eat’ choice
With most pandemic mitigation measures gone, soaring power bills are leaving people with “desperate choices”, the FT said. And many are facing a “heat or eat” conundrum amid the energy price surge.
Even before Ofgem’s announcement, charities across the UK were seeing growing numbers of people turning to food banks as they struggled to pay essential bills. Sylvia Simpson, project director at Leeds charity Money Buddies, told BBC Radio 4’s Today programme that “lots of people” are coming in with different inquiries relating to budgets – and “it’s not just the poorest of people”. It’s people “that have an income as well, but are faced with that choice of whether to heat or eat”.
Shadow Treasury chief secretary Pat McFadden warned that it’s actually a “triple whammy” that households are facing – energy costs, tax rises and declining wages. “Even before these rises have been announced, people have been so fearful they have been turning their heating off,” he told Sky News. “These three things are coming together to squeeze household incomes in a way that we haven’t seen for many, many years.”