The UK’s energy price crisis will become “truly horrific” with as many as 40 per cent of people being pushed into fuel poverty unless Rishi Sunak takes urgent action, the boss of one of Britain’s biggest suppliers has warned.
Scottish Power chief executive Keith Anderson said the chancellor must act urgently and be “more radical” to limit the impact of rising gas and electricity prices.
Mr Anderson told MPs that Scottish Power had been inundated with 8,000 calls from customers worried that they would not be able to afford to power their homes.
It came as Hayden Wood, the boss of Bulb, was told it was “staggering” that he continued to receive a £250,00-a-year salary underwritten by taxpayers, after the energy supplier collapsed last year.
Mr Wood said he had been working “very hard” to minimize the cost to taxpayers of Bulb’s failure.
Scottish Power’s Mr Anderson said he was “hugely concerned for people” facing large bill increases. “There are so many people who are going to really, really struggle.”
He added: “There is a huge amount of anxiety from people on the phones about what they are going to do and what they face… A lot of people for the first time facing this issue, they’ve never been in this position before.
The energy boss said his biggest concern was what would happen in October, when the price cap is set to jump again, taking the average bill close to £2,000 a year.
While the cap has already risen 54 per cent this month, consumers are partially cushioned from the impact by warmer temperatures, which mean lower energy bills.
“I honestly believe the size and scale of this is well beyond what I can deal with, what this industry can deal with. We need a massive shift, a significant shift in the government approach towards this.”
“I think the problem’s got to a size and scale where it requires something significant of that nature where, for those people who are deemed to be in poverty… that puts their bill back to where it used to be before the gas crisis. “
Mr Anderson called for a deficit fund and a “social tariff” which would replace the heavily criticized energy price cap.
Under the plan, vulnerable households and customers on lower incomes would receive a discount of up to £1,000 a year on their bills.
The money would be repaid by energy customers and taxpayers over a 10-year period.
E.On UK chief executive Michael Lewis also backed a social tariff, but said more immediate measures such as a reduction in VAT were required.
He warned that between 30 per cent and 40 per cent of people in Britain might go into fuel poverty from October when the price cap is likely to rise significantly again.
Current government measures have widely been seen as inadequate. The chancellor declined to offer further support for struggling families in his latest tax and spending announcement.
Mr Sunak chose to stick with previously announced rebates on council tax bills and a £200 discount on retail energy bills which will be repaid through a levy on bills over the next five years. The two schemes will only cover a fraction of the increases that energy customers face.
With around a third of households expected to be struggling to afford adequate heating and electricity this winter, pressure is mounting on the government to do more.
Mr Anderson urged ministers to accelerate the transition to renewable energy, which he said was being held back by inadequate investment and cumbersome planning systems which make it slower to build new capacity in the UK than in many other countries.
Vladimir Putin’s invasion of Ukraine has highlighted Europe’s reliance on Russian oil and gas, giving renewed impetus to the drive towards net zero emissions.
Soaring prices have helped to force more than two dozen suppliers out of business in the past 12 months. The boss of British Gas owner Centrica warned MPs that more suppliers would go under next year.
Hayden Wood, the chief executive of Bulb, which has been propped up with more than £1.7bn of public funding, defended his actions in the run-up to his company’s collapse into special administration.
Asked by the committee whether it was “morally justifiable” that he continued to receive his £250,000-a-year salary after Bulb failed and was bailed out by the government, Mr Wood said he and his team had been working “very hard”.
He added: “Everything we are doing right now is to try and complete a sale of the company so that we can minimize the cost to taxpayers and minimize the disruption to consumers.