Scots could see energy bills double by April in shock new cost of living crisis prediction

Around 1.5m Scots households saw their energy bills soar by up to £693 a year after the energy market regulator Ofgem hiked the price cap by the biggest increase yet in April.

From April 1, the three in four customers on default tariffs paying by direct debit saw an increase of £693 from £1,277 to £1971 while the rest who are on prepayment meters - and tend to be among the most vulnerable - have seen a rise of £708 from £1,309 to £2017.

The sharp 54% rise, which will impact half the population, was said to be driven by a record rise in global gas prices, with wholesale prices quadrupling in the last year.

Ofgem has since then said this cap could reach £2,800 by October, pushing more families into hardship at the start of winter.

Forecasters from Cornwall Insight, predict that another price hike could actually push the cap to £3,244 per year from October.

The latest forecast from the BFY Group comes after the Kremlin further strangled the flow of gas to Europe. While the UK gets very little of its gas directly from Russia, the price paid here is determined by what happens across the continent.

Today gas prices jumped by 11 percent in early trading as Europe beame braced for a further cut to Russian gas supplies.

Dr Gemma Berwick, a senior consultant at BFY Group said: “Following further rises in wholesale prices as flows of gas from Russia to Europe via the Nord Stream 1 pipeline drop to 20% of capacity, we now forecast the Ofgem price cap to rise to £3,420 in the fourth quarter of 2022 and £3,850 in the first quarter of 2023.

“This will make the average household bill over £500 for January alone.”

Ofgem can update the energy price cap twice a year, however, new changes means that it now has the power to change it every three months going forward. The cap is based on the average cost of energy in the previous months.

The rise in energy bills would place even more pressure on hundreds of thousands of Scots households that are already struggling to survive under the soaring cost of living crisis. In May, ministers were forced to act by announcing a major support package for struggling households.

Flows through the key Nord Stream pipeline are expected to fall to about 20 percent of capacity this morning – in line with cuts announced by the Kremlin earlier this week.

Moscow has been gradually cutting supplies to Europe, blaming maintenance issues with a turbine. But western leaders have accused Putin of using the turbine as a pretext as he weaponises energy supplies.

The EU has rushed through an emergency plan to cut gas use over the coming months amid concerns the bloc could face shortages over the winter, leading to rationing and blackouts.

The latest jump in European gas prices follows a 24 percent surge over the previous two days, exacerbating the energy crisis that is threatening to plunge the region into a recession.

MPs have warned that millions of people face falling into "unmanageable debt" if the government does bit update its energy support package before winter.

A number of measures were unveiled earlier this year aimed at helping people pay their bills, as prices rocketed due to a massive rise in wholesale energy costs.

Most households will receive at least £400, with more for people in vulnerable groups such as pensioners, the disabled, and those on low incomes.

But this was when the energy price cap went up by 54% to £1,791 for an average household and was predicted to rise further.

the business, energy and industrial strategy committee said this would mean more help is needed.

The committee's chairman Darren Jones said: "Once again, the energy crisis is racing ahead of the government.

"To prevent millions from dropping into unmanageable debt, it's imperative that the support package is updated and implemented before October, when the squeeze will become a full-on throttling of household finances and further tip the economy towards recession."

The committee has been hearing from experts, ministers, and industry insiders for months, and Mr Jones said the message was: "If you think things are bad now, you've not seen anything yet."

"This winter is going to be extremely difficult for family finances, and it's therefore critical that public funds are better targeted to those who need it the most," he added.

The committee suggested that the energy price cap be axed in favour of a discounted tariff for the most vulnerable.

Tory leadership candidate Rishi Sunak has come under fire for “flip-flopping” on tax after pledging to cut VAT on energy bills.

It came after the former chancellor unveiled plans to remove VAT from domestic energy bills for a year if the price cap exceeds £3,000 as is forecast by experts.

But leadership challenger Liz Truss's campaign declared it a “screeching U-turn” after Mr Sunak has repeatedly branded her tax-cutting plans as “comforting fairytales” throughout the contest, which has been dominated by bitter clashes over taxation.

The Institute for Fiscal Studies (IFS) said the policy would primarily benefit people with large houses and energy bills, but not the poorest.

“By providing more support to those whose use more energy, it would be well targeted at those who face the biggest rise in their energy bills, but not at those – the poorest – who are least able to cope with the rise in costs,” Stuart Adam, a senior IFS economist, said.

Mr Sunak rejected calls in February for a VAT cut to energy bills, telling the Commons “there would be no guarantee that suppliers would pass on the discounts to all customers”.

But the former chancellor’s campaign team said his new “winter plan” to tackle inflation and the cost-of-living crisis stands in contrast to the inflationary £55 billion of fiscal commitments Ms Truss has made.

Transport Secretary Grant Shapps, a supporter of Mr Sunak, defended Mr Sunak’s £4.3 billion policy as sensible as it would not add to inflation.

A UK government spokesman said that predictions over future energy bill was speculation.

The spokesman said: “Unlike Europe, Britain isn't dependent on Russian gas. The UK’s secure and diverse energy supplies will ensure households, businesses and industry can be confident they can get the electricity and gas they need. 

“However, we are vulnerable to volatile gas markets. While no national government can control the gas price, we have introduced an extraordinary £37 billion package to help households, including £1,200 each for 8 million of the most vulnerable households."