Article Content
MarketFlick Insights
Broken promises : Burnham criticised as energy bills set to rise again
At a glance
- Ofgem will raise the energy price cap 4% from October, to an average bill of £1,723 per year.
- Opposition parties say Labour has failed to deliver promised cuts; political pressure on PM Andy Burnham is rising.
- Cornwall Insight forecasts a further 9% rise to £1,872 from January if high gas prices persist.
- Boston Consulting Group projects energy bills could rise by £264 by 2035 without policy changes.
- Government measures include cutting VAT on electricity from October and removing around £150 of costs earlier in the year; stripping policy costs from bills is being considered.
- Brent crude remains elevated (around $85/barrel this week), up from about $60/barrel in January, adding upward pressure on energy costs.
Rising bills put pressure on Burnham
Prime Minister Andy Burnham is facing intensified criticism over his handling of the cost-of-living crisis after the energy price cap was confirmed to rise again. Ofgem said the cap will increase by 4% from October, taking the average household bill to £1,723 per year. Opposition figures accused Burnham of failing to deliver on Labours pledge to cut energy bills, with some describing the rise as evidence of broken promises.
Burnham acknowledged the coming increase will be difficult for many households and conceded that his move to remove VAT from electricity bills will not be enough to stop prices climbing. We know the price cap will have an impact, but it is what we can do right now, he told reporters, adding that the government will continue to seek long-term ways to reduce energy prices.
Shadow ministers seized on the figures. Shadow energy secretary Claire Coutinho said Labour had promised a £300 cut in bills but that they had instead risen by nearly £400. She described the Conservative cheap power plan which proposes scrapping government taxes and levies on bills as an alternative that would lower costs for households and businesses without costing the taxpayer.
Shadow environment secretary Victoria Atkins called the increase outrageous and accused the government of breaking promises. She warned the hike threatens vulnerable households who rely on payments such as the winter fuel allowance to heat their homes.
Outlook and policy options
Octobers rise follows a 13% increase in the price cap in July. Analysts warned the autumn rise may be a sign of worse to come: Cornwall Insight has forecast a further 9% increase to £1,872 per year from January if international gas prices remain high. The Boston Consulting Group projects bills could rise by a further £264 by 2035.
Consultancies including BCG have urged the government to consider cutting renewable energy levies from household bills and to expand grid connections for data centres to boost demand flexibility and help drive down costs. Energy secretary Miatta Fahnbulleh has indicated the government may strip so-called policy costs from bills and pointed to measures already taken: cutting VAT on electricity from October and removing around £150 of costs earlier in the year. She said the steps are intended to give families breathing space while ministers seek further protections for households.
Global energy markets remain an added pressure. Brent crude the international oil benchmark surged as high as $110 per barrel following strikes related to Iran, though it has eased to around $85 per barrel this week amid tentative signs of de-escalation. That level is still well above Januarys approximate $60 per barrel and contributes to the upward pressure on energy prices.
For now, the government faces a political test: balancing short-term mitigation measures that offer immediate relief against longer-term interventions to make energy more affordable. With bills set to rise again in October and the outlook still uncertain, the cost-of-living challenge is likely to remain a central battleground in UK politics.
