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Energy crisis ‘on same scale of pandemic’ as debt soars to record high

THE government is facing calls to avert a national crisis on the same scale of the pandemic as energy bill debt soars to record highs. 

Lives could be lost and millions of people left destitute this winter unless more support to protect households against a cataclysmic rise in energy bills is offered by ministers, consumer expert Martin Lewis has warned. 

Energy bills are now a “national crisis on the same scale we saw during the pandemic,” he said, warning that support needs to double to make up for the huge hike expected later this year. 

It comes as a survey by comparison site Uswitch suggests six million households already owe £1.3 billion to energy suppliers: £206 on average per household.

This is before energy prices rise further this autumn with annual bills expected to hit £4,266 from January, according to experts. 

Despite this, Tory leadership hopeful Liz Truss has dismissed calls to agree help for rising energy bills with the government and her rival Rishi Sunak before the contest is over, describing such proposals as bizarre.

Treasury Minister Simon Clarke said yesterday that the government was working on a fresh package of cost-of-living support for the next prime minister to consider when they take office, but this would not be decided before the end of the election period, he suggested. 

Mr Lewis said that failures to put in place firm measures to cushion the blow on consumers ahead of the new price cap announcement on August 26 were incredibly damaging, and he also criticised the Tory candidates’ plans to tackle the cost-of-living crisis, warning that tax cuts and a green levy alone are going to “leave millions destitute and in danger this winter.” 

Ministers are set to meet energy bosses later today to discuss measures to tackle rising prices. Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng will ask gas and electricity company executives to submit a breakdown of expected profits and payouts as well as investment plans for the next three years.

Big fossil fuel firms, including Shell and BP, have raked in record high profits since the energy crisis while consumers have struggled to make ends meet with rising costs. 

Education Secretary James Cleverly said ministers would seek to hold energy firms “to account about what they’re going to do with those profits.”

However, Lib Dem leader Ed Davey warned the meeting risks becoming “a pointless talking shop” unless a tougher windfall tax is confirmed.

Labour is urging ministers to use today’s meeting to close a major tax loophole in the windfall tax, claiming that for every £1 invested, 91.25p will go back to firms in extra tax relief.

Shadow chancellor Rachel Reeves said: “The Tories are handing oil and gas giants billions in tax breaks just for them to pass it on to shareholders. The government should be ashamed this loophole existed in the first place.”

Campaigners have argued that plans to impose a 25 per cent tax on oil firm profits does not go far enough. 

Global Justice Now director Nick Dearden said: “The cost-of-living crisis has been driven by speculators and monopolists, but it’s ordinary people who are paying the price through high prices and falling living standards. 

“Taxing some of the obscene profits which the big energy corporations are raking in is certainly a start, providing that money is used to support those suffering. 

“But it isn’t remotely sufficient. We need to directly constrain the prices being charged by energy and food corporations and challenge the power of those monopolies as well as the financial markets over our lives.”

Climate groups have called for long-term solutions to the energy crisis, including investment in renewable energy and national insulation programmes. 

Greenpeace UK political campaigner Ami McCarthy said: “The government needs to wake up and stop giving ludicrous investment incentives to fossil fuel companies. 

“Oil and gas is at least four times more expensive than renewables; it makes no difference to our bills because it belongs to the company that drills it, not to us; and it makes the climate crisis much worse.

“Give us power that actually cuts our bills and cuts carbon emissions; and give us home upgrades that stop us spending on energy that goes out the window. It really is a simple choice.”

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