Energy bills forecast to rise by 30% in 2022
Squeezed Britain: One in TEN firms has raised their prices already amid fears of runaway inflation – driven by post-Covid supply chain crisis and energy crisis that will see the average households paying £1,660 more next year
29% of firms report higher-than-normal rise in cost of materials, goods, servicesConstruction, services and manufacturing firms were the worst hit, reports ONSResearch agency Cornwall Insight predicts energy price cap will soon be £1,660The current cap, brought in to protect poor households, is at £1,277-a-yearThe cheapest fixed deal is currently around £1,800-a-month and is risingMore energy firms are predicted to go out of business due to price of gas
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Firms are increasingly passing on soaring costs to consumers as the supply chain crisis wreaks havoc across the UK’s economy, with one in 10 having hiked prices.
Nearly a third (29 per cent) of companies in Britain have seen a higher-than-normal increase in the cost of materials, goods and services, according to official figures.
The data from the Office for National Statistics’s (ONS) latest business survey also found that construction, services and manufacturing firms were the worst hit.
As firms battle against rising costs of everything from energy to staff wages, they are resorting to increasing price tags to consumers to weather the inflation pressures.
It comes as experts warned today that Britons could see their energy bills rise by 30 per cent next year – with a minimum increase of £383-a-year.
The latest ONS survey showed that 10 per cent of businesses reported increasing the price of goods and services in early September – up from 8 per cent in mid-August and 4 per cent in late December.
The data showed that, of these, nearly a quarter (23 per cent) were retailers across the wholesale and consumer-facing sectors and 25 per cent in the manufacturing industry.
Research agency Cornwall Insight has predicted further volatile gas prices and the potential collapse of even more suppliers could push the energy price cap to about £1,660 in summer.
The forecast is approximately 30 per cent higher than the record £1,277 price cap set for winter 2021-22, which commenced at the start of October.
Craig Lowrey, senior consultant at the firm, said: ‘With wholesale gas and electricity prices continuing to reach new records, successive supplier exits during September 2021 and a new level for the default tariff cap – £1,277 for a typical dual fuel direct debit customer – for Winter 2021-22, the GB energy market remains on edge for fresh volatility and further consolidation.’
Energy regulator Ofgem reviews the price cap once every six months, and changes it based on the cost that suppliers have to pay for their energy, cost of policies and operating costs, among other things.
The Office for National Statistics (ONS) said its latest business survey showed nearly a third (29 per cent) of companies have seen a higher-than-normal increase in the cost of materials (dark blue line) and the 10 per cent have said they have increased prices (light blue line)
Britons could see their energy bills rise by 30% next year, analysts have said
Research agency Cornwall Insight has predicted suppliers could push the energy price cap to about £1,660 in summer. The forecast is approximately 30% higher than the record £1,277 price cap set for winter 2021-22, which commenced at the start of October. It was £1,138 before that
In a statement to the BBC, Ofgem acknowledged it was a ‘worrying time for many people’.
The regulator added: ‘The energy price cap covers around 15 million households and will ensure that consumers don’t pay more than is absolutely necessary this winter.
‘However if global gas prices remain high, then when we update the price cap unfortunately the level would increase.
‘Any customer worried about paying their energy bill should contact their supplier to access the range of support available.’
40 per cent of UK energy is created using gas, and Vladimir Putin was today accused of turning energy ‘into a weapon’ by hinting he will pump more of it into Europe if Brussels approves Russia’s controversial pipeline bypassing Ukraine as Britain’s looming energy crisis got worse for millions who now face paying between £500 and £800-a-year more for their energy in 2022.
Wholesale gas prices surged to a record 400p yesterday – a 37% increase in 24 hours and 600% up on January – but dropped to around 274p today after the Russian President’s intervention.
Experts now believe that the UK’s energy price cap, brought in to protect the poorest households, will rise to about £1,660 from April 1 – up from £1,277 today – and the cheapest fixed deal is now £1,800-a-year – approaching £1,000 more than 12 months ago.
The pain caused by sky-high gas prices came as Britons face the biggest squeeze on their finances for more than a decade because of inflation, rising prices and looming multiple tax increases all coupled with product shortages caused by gaps in global supply chains and a lack of HGV drivers.
Russia’s manipulation of the gas market hits prices in the UK because Britain is one of Europe’s largest users – but its own production in the North Sea and the Irish Sea has decreased massively over the past 20 years, forcing the Government to now import more than half of its gas from mainly Norway – but also from Holland, Belgium and Russia through long distance pipelines.
A small amount comes as liquid natural gas, mainly by ship from the Middle East – but these supplies have also been hit by growing post-pandemic demand in Asia, further raising prices.
Putin is accused of deliberately withholding gas supplies as leverage with the EU, who he wants to sign off on his new £8.1 billion Nord Stream 2 gas pipeline, run by state energy Gazprom, that bypasses Ukraine.
Britain is opposed to it, arguing it gives Moscow too much power over the supply of gas and the price it is sold at. But Germany, where the pipe arrives from Russia, wants it to go ahead and the Biden administration has performed a U-turn after presidents Trump and Obama came out against.
Sending the price of a therm tumbling by £1 yesterday afternoon, Putin said pointedly: ‘Let’s think through possibly increasing supply in the market, only we need to do it carefully. Settle with Gazprom and talk it over’.
In response Jennifer Granholm, the US secretary of energy, said the US is watching Russia ‘carefully’, adding: You don’t want to see energy made into a weapon’.
Tory MP Sir Iain Duncan Smith told MailOnline Russia was ‘bullying’ the EU and the UK should be exploiting shale gas supplies to get ‘completely clear of any dependency’.
‘Most of our gas is either home produced or from Norway. We are not dependent on Russian gas in the same way as Europe is, especially Germany,’ he said.
‘But we should be allowing more explanation. It should be a reminder that we are sitting on a huge supply of shale gas. It is an absurdity not to want to tap into that. Either we make ourselves dependent on countries like Russia, or we actually start looking for more gas supplies. You need back up to ensure we have always got energy when you need it, and you are not reliant on imported gas which is very expensive.’
Sir Iain said: ‘Russia is playing games with the Europeans and they are determined to open Nord Stream 2. That would bypass the Eastern Europeans. It will allow them to bully everyone from Ukraine right the way through using their ability to shut off gas without shutting it off to the Europeans.’ He added: ‘The eastern Europeans are feeling completely let down by the European commission.’
Russia’s ploy emerged hours after French fishermen, angry at the delay in granting licences to plunder British waters, threatened to blockade food and wine destined for the UK from France before Christmas having already threatened to cut power to Jersey.
Rising energy prices could add 30% to bills next year, experts warn, and there increasing concerns about inflation, leaving UK households facing a further financial squeeze because of rising prices, labour shortages and gaps in global supply chains. A lack of HGV drivers led to farmers pouring milk down the drain today because of a lack of transport with pig farmers fearing they must kill 120,000 animals on their farms because abattoirs lack the butchers needed to carve them.
As a gloomy winter approaches, petrol is still scarce and prices are up, food prices are increasing, house prices are growing and taxes such as national insurance and council tax are also about to go up all faster than wages. The cost of electricity and gas is also hitting power hungry industries such as steel, glass and chemicals, meaning consumers will soon be paying more for a huge number of products including cars, building materials and even toilet roll.
Intel, the world’s largest maker of computer chips, has said that the shortage caused by covid shutting Asian factories will not stabalise until 2023 and means electronic gifts for Christmas will be short in supply. Boss Pat Gelsinger said: ‘There is some possibility that there may be a few IOUs under the Christmas trees around the world this year’.
As Britain is throttled by rising prices and inflation with a bleak winter approaching, it also emerged today:
British house prices rose by the most in almost 15 years with their climb to new record high levels ton continue;Omni Energy has said it expects to become the 13th UK energy supplier to go bust this year; Labour shortages and transportation issues continue, with Nestle the latest business giant to warn of potential product shortages including Christmas staple Quality Street; Intel has warned that a shortages of chips is set to continue into Christmas an ‘there may be a few IOUs under the Christmas trees around the world this year; Council task could rise by up to five per cent each year for the next three years in order to pay for long awaited social care reforms; MailOnline research reveals the cost of supermarket staples such as pasta, tinned food and meats have all risen by up to 44% because as inflation grips supermarkets; Nearly two-thirds of UK manufacturers plan to raise their prices in the run-up to Christmas due to rising inflation, according to the British Chambers of Commerce;
Wholesale gas prices surged to a record 400p yesterday – a 37% increase in 24 hours and 600% up on January – but dropped to around 274p after the Russian President’s intervention
Putin said that Russia was ready to increase gas supplies, before raising the controversial pipeline his country wants to build, cutting out Ukraine
Map showing points of origin and destination of the Nord Stream pipe (solid line) and Nord Stream 2 pipeline (dotted line) between Russia and Germany. Putin hoped Nord Stream 2 would be finished two years ago, allowing Russia to bypass Ukraine in the south, which carries 50% of gas from Russia out via Poland
Analysis of price rises in the last year shows the cost of a second-hand car has risen more than £1,600, a tank of fuel is up more than £10 and the price of a pint of beer is creeping close to £4
Exclusive research for the Daily Mail by the Centre for Economics and Business Research (CEBR) also yesterday revealed how inflation will cost the typical family of four an extra £1,800 by the end of this year. Meanwhile, a retired couple can expect to see living costs rise by more than £1,100, and a lower income couple could be stung by nearly £900
Gas prices in Britain are closely linked to Europe’s supply from Russia because the UK now only gets around 50 per cent of its supplies from North Sea fields. Prices are rising amid claims Moscow is deliberately withholding supplies while the amount of gas in storage in Britain is low because of a long winter.
Electricity prices are also rising, not helped by the amount generated from renewables dropping due to low winds and a poor summer for sunshine.
Britons could see their energy bills rise by 30% next year, analysts have said, as suppliers are predicted to ‘fall like dominoes’.
Research agency Cornwall Insight has predicted further volatile gas prices and the potential collapse of even more suppliers could push the energy price cap to about £1,660 in summer. The forecast is approximately 30% higher than the record £1,277 price cap set for winter 2021-22, which commenced at the start of October.
Joe Malinowski, founder of TheEnergyShop.com, warned of a ‘gas bill explosion’, adding: ‘As things currently stand, we are headed for another increase of at least £500. If things don’t settle down soon, increases of £600, £700 or even £800 cannot be ruled out.’
Customers of small energy firms could face even bigger increases if their supplier fails. Mr Malinowski warned that ‘energy suppliers are falling like dominos’ and without political action ‘the outcome will be terrible for consumers’.
Britain is facing a bleak winter of soaring energy costs, with gas prices rising by a staggering 37 per cent in a single day and pushing more energy firms to the brink of collapse while the National Grid warned of electricity shortages as the country faces its worst crisis since the first Covid outbreak last year.
While Boris Johnson brushed off the crisis and used his Manchester Tory conference speech to set out his vision for a ‘high wage, high skilled, high productivity’ economy, the price of wholesale gas surged by £1 a unit to 400p per therm this morning – up 37 per cent in a day and 600 per cent higher than the start of 2021.
Prices reversed course hours later, sending the UK contracts back to £2.87, after Russian President Vladimir Putin sought to stabilise the gas market by saying that state-backed monopoly exporter Gazprom could increase supplies to Europe. Critics accused Mr Putin of trying to stave off allegations that Moscow is trying to ‘weaponise’ gas supplies amid tensions between Russia and NATO powers over Ukraine.
Toilet paper and food packaging could be hit by soaring energy costs as firms restrict production to protect their finances, industry bosses have warned.
The chief of the Confederation of Paper Industries called for a ‘temporary winter cost containment measure’ to help companies in the sector with costs going ‘through the roof’.
And the UK’s ceramics sector said some businesses could be forced to shut down production due to high energy costs.
The warnings came after wholesale gas prices surged to a record high on Wednesday, although they dropped back after Russian President Vladimir Putin said the country would stabilise the market.
Andrew Large, director-general at the Confederation of Paper Industries, said its members are being ‘affected very, very severely’ by the cost increases.
He told BBC Radio 4’s Today programme: ‘They’re seeing their costs go up through the roof.
‘It’s damaging their profitability and in some cases it’s causing them to manage their production rates so as not to expose themselves to the very, very highest costs.’
He said there is no cap on business energy costs and urged a ‘temporary winter cost containment measure to try and put a lid on those costs so that these very, very important industries for British society are going to be able to continue to operate’.
Mr Large said the cost rises were impacting a variety of important sectors, including food packaging, toilet tissue and the production of sterile medical packaging.
Laura Cohen, chief executive of the British Ceramic Confederation, told the BBC that energy prices are affecting the viability of firms.
She said: ‘As the high pricing extends, more members are likely to be forced to stop production due to uneconomically higher energy costs.
‘But we’re also concerned the prices reflect the market’s views about the physical availability of gas over the winter.
‘In the event of national supply shortfall, our members are near the front of the queue to be forced off the gas network while households are last, and this can happen at very short notice.
‘A forced quick shutdown runs a very high risk of severe damage to brick kilns, which can be 100 metres long, operating over 1,000C, and that can threaten business viability.’
Rising energy costs are also expected to hit everyday Britons, with analysts predicting bills could rise by 30% next year.
Research agency Cornwall Insight has predicted further volatile gas prices and the potential collapse of even more suppliers could push the energy price cap to about £1,660 in the summer.
The forecast is approximately 30% higher than the record £1,277 price cap set for winter 2021-22, which commenced at the start of October.
Craig Lowrey, senior consultant at the firm, said: ‘With wholesale gas and electricity prices continuing to reach new records, successive supplier exits during September 2021 and a new level for the default tariff cap (£1,277 for a typical dual fuel direct debit customer) for winter 2021-22, the GB energy market remains on edge for fresh volatility and further consolidation.’
Energy regulator Ofgem reviews the price cap every six months, and changes it based on the cost suppliers pay for their energy, cost of policies and operating costs, among other things.
In a statement to the BBC, Ofgem acknowledged it was a ‘worrying time for many people’.
The regulator added: ‘The energy price cap covers around 15 million households and will ensure that consumers don’t pay more than is absolutely necessary this winter.
‘However, if global gas prices remain high, then when we update the price cap unfortunately the level would increase.
‘Any customer worried about paying their energy bill should contact their supplier to access the range of support available.’
Consumers will be better insulated from erratic gas prices as wind and solar power start providing more energy to the UK’s households, the Business Secretary has insisted.
Kwasi Kwarteng said that by decarbonising the UK’s power supply, the Government would ensure that households are less vulnerable to swings in fossil fuel markets.
“The UK so far, as many of you know, has made great progress in diversifying our energy mix. But we are still very dependent, perhaps too dependent, on fossil fuels and their volatile prices,” he told a conference organised by trade body Energy UK.
Earlier this month the Prime Minister announced plans to bring forward by 15 years the target to decarbonise the production of electricity in the UK.
By 2035 all electricity provided to the grid will be from wind power and other technologies such as hydrogen and capturing carbon, Boris Johnson said.
On Thursday Mr Kwarteng said this pledge would help households’ wallets as well as reducing their carbon footprint.
“Our homes and businesses will be powered by affordable, clean and secure electricity generated here in the UK, for people in the UK,” Mr Kwarteng said.
“Relying on homegrown power generation will protect consumers from gas price fluctuations.
“And it will, in the long run, bring down bills. We will use the wealth of Britain’s natural resources to deliver cleaner, cheaper power.”
Mr Kwarteng was speaking after the price of gas spiked in recent weeks. On Wednesday they hit new record highs, but fell again after Russian President Vladimir Putin hinted he might send more gas to Europe.
The prices have driven many businesses to bankruptcy, and energy suppliers that are having to sometimes sell gas for less than they buy it are finding it impossible to continue.
Earlier this week Omni Energy warned customers it is likely to become another casualty in the energy sector.
According to The Guardian, it told customers: “The cost of wholesale energy is continuing to rise and without significant change in the wholesale cost of energy, or a Government intervention, it is highly likely Omni Energy will cease trading before the end of November.”
Stock levels at Britain’s petrol stations recovered to an average of 25% on Sunday, new figures show.
But there was ‘significant regional variation’ ranging from just 16% on average in the South East to 35% in Scotland, the Department for Business, Energy and Industrial Strategy (BEIS) said.
Average stock levels sank to a low of 15% on Saturday September 25, the day after panic buying began.
They were typically at around 33% before the crisis began.
On Friday September 24, fuel sales were up 80% compared with normal levels.
Sales remained ‘substantially above’ average until the middle of the following week when they ‘began to trend back to normal levels’, BEIS added.
The amount of fuel delivered to petrol stations was ramped up following shortages.
The average amount increased from around 16,000 litres a day per filling station before the crisis to a high of 22,700 litres on Tuesday September 28.
Gordon Balmer, executive director of the Petrol Retailers Association, said on Wednesday that 13% of independent filling stations in London and the South East still do not have fuel.
He warned: ‘This is leaving some motorists continuing to feel insecure about fuel availability at their local neighbourhood filling stations.
‘Independent forecourts report a complete lack of visibility as to when their next delivery might arrive, and some have been dry for four days and still waiting for a delivery.’
Mr Balmer claimed attempts by the Government to deal with the crisis – such as deploying members of the armed forces to help deliver fuel – have only had ‘limited success’ in London and the South East.
He added: ‘Much more attention on this issue affecting this region is urgently needed.’
On a day of worsening news, National Grid’s chief executive John Pettigrew told the FT that Britain will face tighter electricity supplies this winter due to a lack of capacity in the system and a colder winter predicted, which means the cost of electricity will increase as gas prices spike to record high.
Investment experts Moody’s also warned that more UK energy firms will go to the wall, which will push hundreds of thousands of people on to more expensive tariffs with new providers. While Britain’s Energy Intensive Users Group, which represents steel, chemical and fertiliser firms, said production at some plants is already being halted ‘at times of peak demand’ due to energy prices. They have called on the Government to give financial support to keep businesses in the way a taxpayer-funded deal to curb CO2 shortages was done to keep two fertiliser plants running last month.