Earlier this year, the UK government sought to protect households against 90% of the expected rise in energy bills through tax cuts, energy bill relief and direct payments. But natural gas and electricity prices have risen since then, as future increases are forecast.

Researchers at the Institute for Government said on Tuesday that the government would need to spend an extra £23 billion ($27 billion) to protect around 90% of households from expected increases in energy bills by April 2023. Equally offset for the year April 2024 A further £90 billion will be spent.

The estimates are based on the proposed price of Scottish Power, one of the UK’s largest energy companies. They have called on the UK government to protect millions of households by freezing their bills for two years, the Financial Times reported.

The average annual bill is currently £1,971 ($2,318) – up 54% so far this year – but is forecast to top £3,500 ($4,117) when a higher price cap is set for the final three months of this year on Friday. Analysts at research firm Oxileon say the average household could be paying £6,433 ($7,579) a year for natural gas and electricity next spring if the government doesn’t intervene.

Scottish Power says the UK government should cap energy bills at £2,000 ($2,356) and pay suppliers to offset higher gas and electricity costs in the wholesale market.

The £100-billion subsidy cost will come from increased government borrowing funded by general taxation over the next decade or so, the Financial Times said, citing unnamed sources familiar with the matter.

“It’s going to be really, really scary for a huge number of people,” Scottish Power CEO Keith Anderson told Scottish TV station STV, referring to the price hike on Monday.

“This is bigger than an epidemic. This is a major national crisis,” he added.

The company did not immediately respond to CNN Business’ request for comment.

The UK government’s 18-month pandemic furlough scheme cost nearly £70 billion ($82 billion). In March 2020, when businesses closed due to the outbreak of the coronavirus pandemic, the government agreed to subsidize workers’ wages to avoid mass layoffs.

So far this year, the government has offered around £33 billion ($39 billion) to help households with energy costs through a mix of tax cuts, energy bill rebates and direct payments. The Institute for Government said in a report published on Tuesday. The UK government says it is doing more.

A spokesman for the Department for Business, Energy and Industrial Policy said: “We know that people are under pressure from rising costs, which is why we have taken consistent action to help families step by step with a £37 billion base package,” said a spokesman for the Department for Business, Energy and Industrial Policy. A spokesperson for the department said.

“We are offering a £400 discount on energy bills this winter and eight million of the most vulnerable households will receive an extra £1,200. While no government can control global gas prices, more than 22 million households are protected by the price cap, which remains in place. to ward off even higher prices,” the spokesperson added.

But alarm is spreading across the UK energy industry. On Tuesday, Philippe Comret, an executive at France’s EDF, a major player in the UK market, told the BBC that without more support, around half of UK households could fall into fuel poverty from the start of next year, meaning they would have to spend more than 10% of their disposable income on energy.

Leaders of the UK National Health Service last week warned of a “humanitarian crisis”. Many people may fall ill this winter as they face “the terrible choice between skipping meals to heat their homes and living in cold, damp and extremely unpleasant conditions,” he said.

Wholesale natural gas prices rose last year as countries reopened from their pandemic lockdowns, fueling a global surge in demand.
Russia’s invasion of Ukraine in late February and resulting energy shortages have pushed up prices further. Western countries have banned imports of Russian coal and oil, and Europe is trying to wean itself off Russian natural gas.

June was the first month in which the United Kingdom did not import any fuel from Russia, according to figures released by the Office for National Statistics on Wednesday.

Eye-watering prices have led to the collapse of 29 small energy suppliers in Britain since last summer. Those who have survived have outspent their customers.

— Benjamin Brown contributed reporting.

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