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Martin Lewis warns UK households face £3,500 energy bills in winter

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Money Saving Expert's Martin Lewis. Photo: Kirsty O'Connor/PA
Money Saving Expert's Martin Lewis. Photo: Kirsty O'Connor/PA

Money saving guru Martin Lewis has warned Britons face an eye-watering hike in their energy bills as the cost of living soars, slamming the government for its approach to the crisis.

Lewis said the "typical energy bill" could to rise to £3,500 a year, piling more pressure on struggling households.

He called the situation "desperate" and predicted that millions of families in the UK will be forced to make "difficult financial choices".

Speaking to BBC Radio Four on Thursday, Lewis said: "I've never seen anything like this. It's going to throw many households into a terribly difficult financial situation that will leave them making some awful choices.

"Let's be absolutely plain here, we know roughly what the price cap is going to be. It is set based on a published algorithm, it is based on wholesale prices. The October price cap is based on prices between February and mid-August so we're nearly at the end of that.

Read more: FTSE 100: British Gas owner hands billions to shareholders as customers face £3,500 bills

"And the current prediction is prices will rise 77% on top of the 52% rise we saw in April, taking the typical bill to £3,500 a year, that's with the prediction I go for. Others are saying it will go higher — we're expecting it to rise again in January.

"Now what that means year on year from last October to this October, a typical house will be paying £2,300 a year more on their energy bills alone. Forget the rises in mobile and broadband and tax and everything else."

The money saving expert also urged Tory leadership hopefuls Rishi Sunak and Liz Truss to take action.

Sunak has pledged to temporarily scrap the 5% value added tax (VAT) rate on all domestic energy bills for the next year, if he becomes prime minister.

Ofgem's energy price cap is expected rise to more than £3,200 in October, when every household will receive an automatic £400 discount on their energy bill in a bid to combat soaring costs.

On Thursday, British gas owner Centrica (CNA.L) posted a £1.3bn profit and reinstates its dividend payout to shareholders at a time when soaring energy bills push many households into poverty.

Read more: UK faces power crunch in winter, grid operator warns

It comes after Russia further slashed the flow of gas to Europe, with the Nord Stream 1 pipeline that brings Russian gas to the bloc only running at 20% of its maximum capacity.

Although the UK gets just 6% of its gas directly from the Kremlin, the price paid in the UK is determined by what happens across the continent.

The National Grid (NG.L) warned on Thursday the UK will face "knock-on impacts" such as rocketing prices if Russian flows to Europe are interrupted.

Meanwhile, the Electric Systems Operator said Britain's electricity supply could be tight at times this winter as the energy price cap is set to rise further.

Watch: How to save money on a low income

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