Jeremy Hunt is under increasing pressure to scrap a planned cut in support for energy bills after research showed paying for heat and electricity would eat up almost 10% of workers’ wages after the move in April.
The chancellor has so far resisted calls to scrap the change to the energy price guarantee, which will raise the cap on the typical annual household bill from £2,500 to £3,000.
However, analysis by the Trades Union Congress shows that monthly bills are expected to reach £250 from April – almost 10% of the UK’s £2,589 monthly wage – up from £208 a month currently.
After support is cut, the amount of monthly earnings spent on energy will more than double the £107 a month normally paid in March last year.
The energy price guarantee was introduced by then prime minister Liz Truss last year, who promised Britons that annual bills for a typical household would be capped at £2,500 for two years.
Hunt later made the contract less generous, capped at £2,500 for six months until April, rising to £3,000 for a further year.
Bills are expected to be up to 40% higher than last year from April, due to the reduction in support and also because the £400 one-off payment announced by the then chancellor Rishi Sunak last spring will not be repeated this year.
TUC general secretary Paul Nowak said: “The Government must cancel the impending rise in household energy bills in next month’s Budget. Families across Britain are being pushed to the brink by high bills.
“This means imposing a bigger windfall on greedy oil and gas suppliers. And that means an increase in wages across the economy.”
The TUC joins consumer champion Martin Lewis and 70 organizations in calling for the rise to be stopped. In a letter to Hunt sent earlier this month, Lewis said: “The damage to people’s pockets and mental health from another round of energy price increase letters is disproportionate.”
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The National Energy Action Plan has predicted that the number of households in fuel poverty will rise from 6.7 million to 8.4 million from April if the price guarantee increase is implemented.
On Monday, Ofgem will confirm the level of the price cap for the three months from April 1. It is expected to fall by around £1,000 to just under £3,300. The energy price guarantee means that standard bills do not have to reach this level, but the cap is used to calculate the cost of covering bills for the public.
Consultancy Cornwall Insight estimated that a £500 cut in the proportion of the typical bill covered by the energy price guarantee would save the government £2.6bn.