Energy price hike: Rishi Sunak says soaring energy prices is ‘something we will have to adjust to’

Ofgem announced today that bills are set to rise by around £693 every year

Chancellor Rishi Sunak has said the British public will “have to adjust” to soaring energy prices, after it was announced bills are set to rise by £693 every year.

On Thursday industry watchdog Ofgem announced the price cap on energy bills will be increased from April.

Around 22 million households will be affected by the price increase, with bills set to increase by around 54% taking the annual total to a record £1,971.

In response to the price increase, Mr Sunak announced a range of measures which he says will help households to cope with the spiralling costs.

However, the temporary measures were also unveiled alongside confirmation that National Insurance would also rise in April.

Rishi Sunak has said that the country will need to “adjust” to soaring energy prices after the announcement that bills are set to rise by nearly £700 each year. (Credit: PA)

Public will ‘need to adjust’ to rising prices

During a press conference, Mr Sunak said the rise in energy prices will hit not only the poorest families but also middle-income families.

He said: “The factors that are driving gas prices higher are global in their nature.

“I don’t have a crystal ball as to what the future holds but I want to be honest with people.

“Higher energy prices are something we will have to adjust to, in common with other countries around the world and it would be wrong to pretend otherwise but what we can do is slow that adjustment to make it more manageable for people’s household budgets.”

The Resolution Foundation think-tank predicted that the price increase could push around four million UK households into fuel poverty, double the current amount.

Measures to curb rising costs to be introduced

Earlier on Thursday, the Chancellor announced that households in need will be given a £200 rebate on energy bills initially, although this will be expected to be paid back in £40 increments over five years.

However, the £200 rebate will “kick in” from October, when energy prices could be hiked up once more to an eye watering £2,329.

Those living in council tax bands A to D will also be given a £150 reduction on their council tax, bringing the total support package for each household to £350, and local authorities will be given a share of £144million to help support vulnerable households.

The Bank of England has also increased the base interest rate from 0.25% to 0.5% to help households who will be hit by the energy price hike.

Mr Sunak said: “I think the first thing to say is that I absolutely recognise this is a difficult time.

“I know this is probably the number one issue on most families’ minds, you know – they’re looking at the news, they’re seeing prices go up, they’re worried about the cost of living, and in particular energy, and that’s why we’re taking action, and I really believe that what we’re doing, £350, it’s a significant amount of money that will make a big difference to the vast majority of households, and I think people, I hope actually, will be reassured by us stepping in to provide that support to ease the adjustment that this is.

“The current energy markets are forecasting that prices go up further in October before falling quite significantly next spring, but again, I don’t have a crystal ball and these things are uncertain.

“We’re front-loading it so the £150 of the £350 comes all in one go at the beginning, but then in October, let’s say the price cap does go up again then – that’s when the £200 rebate will also kick in at that moment so there will be help at that time if that is indeed what happens.”

National Insurance price hike confirmed

The Chancellor went onto speak about the rise in the National Insurance rate, which will also be introduced in April.

Mr Sunak has reiterated the need for the increase is to help deal with the NHS backlog caused by the Covid pandemic.

He said: “What’s the country’s number one priority? It is the NHS. We’re faced with a situation where the backlogs are growing to unacceptable levels due to Covid. I think everyone wants to see action on that.”

While the National Insurance rate increases, the Chancellor insisted any increase in wages should come as a result of increased productivity.

Mr Sunak said: “It is not my job to set wages in the private sector. Of course I want a higher wage economy, who doesn’t?

“The right way to get there is to drive up productivity. We want to make sure that those wages are a reflection of the fact we are producing more, doing more.”

However, he continued to commit to cutting taxes before the next general election, adding: “My mission over the remainder of this parliament is to cut people’s taxes. That’s what I want to deliver.”

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