ouseholds will be hit by a “winter like never before” with people going hungry and cold unless the Government acts swiftly, the boss of the UK’s third biggest energy company warned on Thursday.
Stephen Fitzpatrick, founder of Ovo Energy which has 4.5 million customers, sounded the alarm over how the cost-of-living crisis could worsen so dramatically.
Millions of families are set to see their energy bills sky-rocket from £1,971 to £3,549 in October and then possibly rise higher.
Mr Fitzpatrick said: “If we don’t use every available moment over the next 12 weeks to solve this, we are going to see a winter like never before with people going hungry and going cold and the NHS being overwhelmed by the health impacts of the energy crisis.”
He is urging Liz Truss or Rishi Sunak, whoever wins the Tory leadership contest, to make it their first priority to help households on low incomes.
He has proposed a ten-point plan for support which would taper off for high earners who use more electricity.
It would be based on creating a government-backed fund which energy companies could borrow from to subsidise bills, a scheme already being pushed by other energy bosses.
But ministers have yet to take up this proposed solution to the energy crisis.
Foreign Secretary Ms Truss, though, gave her strongest signal yet that she will offer more support to households struggling with their energy bills, as well as cutting taxes, including reversing the National Insurance Contributions hike and not going ahead with the increase in Corporation Tax from 19 per cent to 25 per cent.
“I will also deliver immediate support to ensure people are not facing unaffordable fuel bills,” she wrote in The Sun on Thursday.
Ex-Chancellor Mr Sunak is proposing temporarily axing VAT from energy bills, as well as more support for the less-well-off.
However, the Resolution Foundation warned that the next Prime Minister’s time in office looks set to be dominated by the “terrifying” prospect of the biggest squeeze in living standards for a century.
The think tank’s latest report said real household disposable incomes are on course to fall by ten per cent over this year and next, and that the number of people living in absolute poverty is set to rise by three million, to 14 million people in 2023-24, unless policy or economic forecasts change.
Relative child poverty is projected to reach 33 per cent in 2026-27, its highest level since the peaks of the 1990s, according to the report, titled In at the deep end: the living standards crisis facing the new Prime Minister.
With real earnings falling at their fastest rate since 1997, the Resolution Foundation also warns that by the middle of next year real pay growth since 2003 will be wiped out.
Lalitha Try, a researcher at the Resolution Foundation, said: “Britain is already experiencing the biggest fall in real pay since 1977, and a tough winter looms as energy bills hit £500 a month. With high inflation likely to stay with us for much of next year, the outlook for living standards is frankly terrifying.
“Typical households are on course to see their real incomes fall by £3,000 over the next two years – the biggest squeeze in at least a century – while three million extra people could fall into absolute poverty.
“No responsible government could accept such an outlook, so radical policy action is required to address it. We are going to need an energy support package worth tens of billions of pounds, coupled with increasing benefits next year by October’s inflation rate.”
Forecasters have scaled back their predictions for energy bills to rise as high as £6,000, or even £7,000 after the wholesale price of gas has fallen in recent days.
The soaring cost of gas has been blamed on Vladimir Putin’s invasion of Ukraine and his decision to cut back on flows to Europe.
A UK Government spokesperson said: “Countries around the world are grappling with rising prices but we recognise that inflation is causing significant challenges for families.
“We are continuing to support the economy and families through tax cuts and £37 billion worth of help for households throughout the year, including direct payments of at least £1,200 for eight million of the most vulnerable households.
“We are making necessary preparations to ensure a new government will have options to deliver additional support as quickly as possible.”