STRUGGLING Scots are facing their “nightmare scenario” as annual energy bills soar by £693 from the beginning of April.
Energy regulator Ofgem has increased the energy price cap to a record £1971 for a typical household as gas prices hit record highs. The price will affect around 1.5 million Scottish households, or half the population.
For those on default tariffs, three in four will see an increase of £693, from £1277 to £1971. Those who are on prepayment meters will suffer a hike of £708, from £1309 to £2017.
Citizens Advice Scotland described the announcement as a “hammer blow” for Scots families, while a leading housing association chief warned it was “hugely negative for poorer communities”.
The Scottish Trades Union Congress (STUC) said the price hike will have life-threatening implications.
Shortly after the announcement, Chancellor Rishi Sunak promised to “take the sting out” of the price rises – but the SNP said the changes “will still leave the majority of families hundreds or thousands of pounds worse off”.
Sunak promised that households in Britain would get a £200 up-front rebate on their energy bills from October and said Scotland would receive an extra £290 million to cushion the blow.
The Chancellor went on to announce a £150 council tax rebate for homes in England in bands A to D – around 80% of the country's homes. The devolved administrations will receive resultant Barnett consequentials of around £565m, including £290m for the Scottish Government.
Responding to Ofgem’s price cap announcement, Citizens Advice Scotland chief executive Derek Mitchell said: “This eye-watering increase is a hammer blow for consumers. One in three of us already find bills unaffordable and shamefully almost half a million people in Scotland have had to cut back on food to deal with unaffordable bills.
“This simply isn’t a sustainable position for people. April will be a nightmare scenario as rising bills and prices in the shops collide with flat or falling incomes, creating a perfect storm that could sweep millions of people across the UK into poverty, debt and destitution. No-one should be forced into the heart breaking choice between keeping their homes warm or feeding their families.
“We need immediate direct interventions. To be clear we are looking for the UK Government to intervene to limit the detriment that these unprecedented bill increases will cause. We also need a long-term plan to keep bills down.”
STUC General Secretary Roz Foyer said the situation is "shameful" and warned the price increase will harm mental and physical health, and ultimately result in more deaths.
She said: "We already know that a third of Scots are finding their fuel bills unaffordable. The proposed £200 rebate comes nowhere near tackling the problem.
"This situation is set to worsen while the UK Government sits on its hands. It is nothing short of shameful that people are being forced to choose between food and heat.
“The threat to households is made all the worse by cuts to Universal Credit and below inflation pay rises."
READ MORE: Rishi Sunak announces loans to offset rising energy price cap
Ian Blackford warned benefits cuts and tax increases mean Sunak’s new announcements will do little to soften the blow for struggling households. Pointing to Boris Johnson’s pre-Brexit promises of lower energy bills, the SNP Westminster leader posted: “Boris Johnson promised energy bills would be cheaper after Brexit – but instead they are soaring. The limited measures today will still leave the majority of families hundreds or thousands of pounds worse off after Tory cuts, tax hikes, and the soaring cost of Brexit and bills.”
Boris Johnson promised energy bills would be cheaper after Brexit - but instead they are soaring.
— Ian Blackford (@Ianblackford_MP) February 3, 2022
The limited measures today will still leave the majority of families hundreds or thousands of pounds worse off after Tory cuts, tax hikes, and the soaring cost of Brexit and bills. pic.twitter.com/ixbwRYG1D2
He added later: "The pitiful measures announced won't even mitigate the soaring cost of energy bills – let alone the cumulative impact of Tory cuts, regressive tax hikes, Brexit, and rising inflation. The majority of families will still be hundreds or thousands of pounds worse off this year.
"Worse still, the key measure amounts to little more than a Tory con trick. Far from being a discount, it is a £200 'buy now pay later' loan. After all the harm they've caused, it beggars belief the Tories are forcing families to pay this money back. They must perform a U-turn and turn it into a grant not a loan."
Scottish Labour leader Anas Sarwar said the price hike will cause “pain and suffering” and criticsed SNP MPs for failing to back Labour proposals for a windfall tax on large oil firms, pointing out that Shell just announced profits of almost $20 billion for 20201.
Martin Wilkie-McFarlane, director of the Wellhouse Housing Association, also raised the alarm over the 54% increase in energy bills from April.
“No matter how many fuel poverty initiatives are run by Scotland's housing associations and our fantastic partner organisations” he tweeted, “this is the reality of the challenge people face. Hugely negative for poorer communities.”
The UK Government will provide the cash for the one-off bills rebate, but it wants the money back so will hike bills by £40 per year over the next five years from 2023 to recoup its cash.
But Some energy company insiders worry that the policy is too reliant on falls in global gas prices. Experts are not sure this will happen, at least not soon. Goldman Sachs has already warned that prices in the gas market are likely to remain at twice their usual levels until 2025.
Labour's shadow chancellor, Rachel Reeves, described the plan as a "buy now, pay later scheme that will build up debt for tomorrow".
Nicola Sturgeon said Sunak's measures “sounded like welcome steps" but warned they were “steps in my view, that do not go far enough”.
She said that “they seem to offer around £350 of help against energy bill increases of around £700”.
Speaking at FMQs, she added: “I also don’t yet know what the position on consequentials will be, but I give a commitment here that, assuming there are consequentials, which I would expect there to be, every single penny of them will go, in Scotland, to helping people deal with the cost-of-living crisis.”
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