Ipswich residents fear winter energy costs despite £45 Government tax cut
Electricity VAT has been scrapped as experts forecast the typical dual-fuel price cap could approach £2,000 in January
People in Ipswich have told Greatest Hits Radio Suffolk they are worried about the cost of keeping their homes warm this winter, as a Government tax cut on electricity bills comes into effect.
VAT was removed from household electricity bills on 1 October, with the Government estimating the measure will reduce the annual Ofgem price cap by around £45 compared with what it otherwise would have been.
The change comes as the energy price cap for a typical household paying by direct debit rose by 4% to £1,723 a year for the period between October and December.
The cap is not a limit on the total amount a household can be charged; actual bills depend on energy use, location and payment method.
However, energy consultancy Cornwall Insight has warned a considerably larger rise could follow in January.
Its latest forecast puts the cap for a typical dual-fuel household paying by direct debit at £1,999 a year from January — £276, or 16%, higher than the current level.
Cornwall Insight said the forecast increase is largely being driven by disruption to global gas supplies linked to the conflict in the Middle East. The figure remains a forecast: Ofgem is due to announce the cap applying from January to March by 25 November. Cornwall Insight
'A lot of people are going to be in big trouble'
Ipswich resident Tracey Shephard said she believed her household would "just about cope" with a further rise, but was concerned about those in a more difficult financial position.
She said: "There's an awful lot of people that are going to be in big trouble and they always seem to do it on the coldest time of year as well, which is awful for people."
Asked what she thought could help, Ms Shephard said she believed the Government needed to intervene.
Another Ipswich resident, Charles Harris, said his circumstances meant he was also exposed to changes in heating-oil prices.
"I'm not on the gas main, so I have to buy heating oil," he said.
"So I get sort of doubly hit, so I'm getting the rise on the energy bills for electricity. But heating oil is a fuel, so I'm getting the rise of the fuel as well.
"That's costing me an absolute fortune."
Mr Harris said he expected some households to face difficult choices this winter, adding: "For some people it's going to be a major problem. It's going to be a choice between food or heating fuel, isn't it?"
Ipswich resident Ann Simpson described the prospect of further energy price increases as "absolutely crazy", asking: "When's it all going to stop?"
John Farrow, also from Ipswich, said he had recently taken out another fixed tariff, which he hoped would protect him from some price fluctuations.
Ofgem says customers on fixed-rate tariffs are not affected by changes to the price cap while their fixed deal applies.
VAT removed from electricity
The Government says removing VAT from electricity will save households an average of around £45 a year.
It says suppliers are also expected to pass the reduction on to customers on fixed tariffs.
Prime Minister Andy Burnham said families needed "breathing space now", while Chancellor John Healey said the tax cut would help keep bills down as the country heads into winter. GOV.UK
The Government says the measure follows £150 of costs removed from bills in last year's Budget and an expansion of the £150 Warm Home Discount to around six million households.
Ofgem advises anyone struggling to pay their energy bills to contact their supplier, which is required to work with customers to offer support such as an affordable repayment plan.