Reactions to today's Ofgem Energy price cap announcement

Conservative Party

Claire Coutinho MP, Shadow Energy Secretary, said:

Labour promised to cut energy bills by £300, but they have gone up by nearly £400 instead.

Our Cheap Power Plan would cut energy bills for households and businesses by scrapping Government taxes and levies on bills, and it wouldn't cost the taxpayer a penny. We have to put cheap energy first.

ENDS

Notes to Editors:

Labour pledged to cut energy bills by £300:

• James Murray said that Labour will bring down energy bills by £300. MURRAY: And that's one reason why today, for instance, we're talking about energy bills now plans to bring down energy bills for goods by £300. You know, the energy bills crisis has been something which has really impacted families across the country. And so bringing those energy bills down' (GB News, 19 June 2024, archived).

• Keir Starmer said Labour's first step' is to set up Great British Energy to save families up to £300 a year'. Labour's first step to set up Great British Energy will save families up to £300 a year off their energy bills. A vote for Labour on Thursday 4 July is a vote for change and to make you better off' (Keir Starmer, Twitter, 19 June 2024, link).

• Keir Starmer said that he stands by the £300 figure and everything else in the Labour Party manifesto. Q: Thank you, Prime Minister. During the election campaign, Labour suggested bills would be brought down around £300 a year by 2030, by your net zero energy plans. Do you stand by that figure? How much can households expect to save?' STARMER: Yes I do. I stand by everything in our manifesto, and one of the things I made clear in the election campaign is that I wouldn't make a single promise or commitment that I didn't think we could deliver in government' (GB Energy Q&A, 25 July 2024, archived).

The Energy Price Cap has risen by almost £400 under Labour:

• Under Labour, the energy price cap has increased by £367 for October to December 2026. The energy price cap for July to September 2024 was £1,568. That has increased to £1,935 for October to December 2026 (Ofgem, Energy Price Cap, 27 May 2026, link; Cornwall Insight, Default Tariff Cap, 19 August 2026, link; Ofgem, Press release, 26 August 2026, link).

• Britain's domestic energy prices are the second highest in the world. Official figures published by DESNZ show Britain's domestic electricity prices are the second highest in the world behind only Germany at 30.45p per kWh. In France, the equivalent price was 23.7p, while in the US, it was 12.9p (DESNZ, Energy Prices: International Comparisons, 27 November 2025, link).

Labour's claimed energy bills cut is an act of deception:

• The government's own press release said that savings due to be identified' for digital ID would be used to fund the VAT cut on electricity bills. The government's press release said: We are funding this through the cancellation of the Digital ID programme, which was going to cost £1.8bn over the next three years. Savings were due to be identified from within existing budgets through reprioritisation, which will now be redirected towards this measure. Any further action, including on funding for longer-term measures, will be taken at the Budget, and all decisions at that point will be funded and also consistent with the government's fiscal rules' (PMO, Press Release, 21 July 2026, link).

• Keir Starmer's energy bill reduction measure did nothing to support business, instead only moving costs from household bills to general taxation. At Spring Statement 2025, Rachel Reeves announced a package which included an £88 saving by moving 75 per cent of the cost of ROCs onto general taxation from energy bills for households and a £59 saving by not renewing the Energy Company Obligation which was funded through a levy on household bills (HMT, Budget 2025, 28 November 2025, link).

Unite

Responding to the latest increase in the energy price cap Unite general secretary Sharon Graham said: 

Today's price cap increase is another nail in the coffin of household budgets this winter. The time for stopgap and ad hoc measures is long gone. We need a complete overhaul of the energy market based on public ownership to drive down bills and end profiteering. 

Last autumn Unite published its Energy Profiteering report which revealed that the principal reason that UK households have the most expensive energy bills in Europe, is a result f the privatised energy system and company profits. In 2024 energy companies made a total of £30 billion in profits. 

The report found that the average household is paying £500 of energy bills to the privateers in company profits. Profit margins are excessive, with the average profit margin being 23 per cent, rising to an eye watering, 38 per cent, for companies involved in the grid. 

Company profits (£30 billion) are a far bigger factor in household bills than green levies. Unite is calling for the renationalisation of the UK's energy system beginning initially with the grid. 

Resolution Foundation

The latest increase in the energy price cap, which comes just as households start putting the heating back on, should prompt the Government to prepare to switch-on targeted energy support as soon as January, the Resolution Foundation said today (Wednesday) in response to Ofgem's announcement.

The energy price cap will rise by 4 per cent, or £60 a year, to £1,723 from 1 October. The latest increase is driven almost entirely by gas, with unit rates rising 8 per cent this quarter and the standing charge rising 2 per cent. Electricity unit rates are set to rise by 1 per cent while the standing charge falls 4 per cent.

The latest rise comes despite VAT on domestic electricity falling from 5 per cent to zero on 1 October, worth around £45 a year to a typical household. Without it, today's cap would land nearer £1,770, a rise of 6 per cent rather than 4 per cent.

With 33 per cent of households' annual gas bill use coming between October and December, this gas-led rise will land just as boilers go back on. Each unit of gas consumed in Q4 will cost 27 per cent more than in Q4 of last year, making it harder for families to keep warm.

The outlook for energy bills from January is even worse, adds the Foundation, with recent moves in commodity markets making another jump in the new year look likely. Wholesale gas prices reached a new post-Iran high in the past week, and current forecasts for January 2027 imply a further 12 per cent rise, on top of that announced by Ofgem today. This means that, in real terms, energy bills in January could be a fifth higher than at the start of this year. 

The Foundation urges the Government to have targeted support designed, costed and ready to switch on if needed from January. Spending £2 billion on such a scheme could save the poorest 40 per cent of households an average of £175 per year, ensuring that yet another energy price spike doesn't further deepen the UK's cost of living crisis.

Jonathan Marshall, Principal Economist at the Resolution Foundation said:

This gas-led rise in the energy price cap will land just as boilers are turned back on, pushing family bills up at the worst time of the year.

Another jump in the new year looks likely, meaning energy bills in January are set to be a fifth higher than the start of this year.

This underscores the need for the Government to have targeted support with energy bills designed, costed and ready to switch on as soon as January, in order to protect households from another cost of living crunch.

TUC

• TUC calls for windfall tax on bank profits to cut energy bills for the majority of households by up to £559

• Stark new poll findings show households up and down the country are still up against it

• Almost a quarter (23%) are skipping meals each month to save money while 3 in 10 (29%) say they have had to use savings some months, most months or every month in the last year to cover their monthly costs

As the energy price cap is announced today (Wednesday), the TUC has renewed its call for a windfall tax on bank profits to pay for a cut to the majority of UK households' energy bills.

The call comes as new polling conducted by YouGov for the TUC shows that in the three months up to late June more than a third (35%) of adults had cut back on hot water usage for baths and showers at least several times a month to reduce their spending and 15% say they do this on most days. This is despite the fieldwork being complete in warmer months of the year.

And to reduce their spending, more than a third (37%) did not use electrical appliances as often as needed regularly, with 15% doing this every day or most days.  

The polling also revealed in the last three months before the research (March to June):

• Almost a quarter (23%) refused a meal to save money on a monthly basis.
• Two in five (40%) avoided putting their heating on at least several times a month.

While almost a quarter (23%) said they have made large or significant cutbacks on food shopping in the last year.

Meanwhile, many said they were going into debt or dipping into savings to get by:

• A fifth (20%) said that they had gone into debt once, a couple of times or several times because they had been unable to pay an unexpected bill in the last year, with 15% saying this had happened at least a couple or several of times.
• More than a fifth (22%) said that they struggled to or could not afford their monthly costs.
• Half (51%) said they had to use their savings to cover their monthly costs in the last year, with over a quarter (29%) saying this happened regularly (every, most or some months).
• A quarter (25%) said they had gone into debt to pay for monthly expenses in the last year, with 14% saying this had happened regularly (every, most or some months).
• More than a fifth (21%) said that they hadn't been able to put any money into savings in the last year.

Cost of living pressures

The TUC is calling for an increase in the tax on profits of banks to pay for a social tariff and cut bills for the majority of households by up to £559 a year.

The government has been straight out of the blocks with measures to tackle the cost of living, including scrapping VAT on electricity bills. 

The TUC says scrapping VAT is welcome and will help to cushion the blow to households but points to longer term increases in recent years. 

While Trump's illegal war has seen households hammered by further jumps in energy bills, costs have been stubbornly high since Russia's illegal invasion of Ukraine.

TUC analysis shows that average annual payments for energy bills have gone up by £437 compared to May 2021 costing households a total of £2,500 in the time since (up to May 2026). 

At the same time, bank profits are booming. The big four banks are making more than £1bn a week, based on the first half of the year.

Currently the bank surcharge is an additional 3% corporation tax on the profits of banking companies above £100 million, which was reduced from 8% in April 2023 by the Conservatives just as bumper profits kcked in alongside higher interest rates.

The TUC is calling for the government to increase the surcharge to raise up to £60 billion over the next four years and help cover the cost of the social tariff.

• A 16% surcharge, which is doubling what it originally was before the Conservatives cut it, would deliver £24bn over four years.
• A 35% surcharge, which would be the same level as the windfall tax the Conservatives imposed on energy companies, would deliver £60bn over four years.

Even the bare minimum of reversing the Tory cuts and setting it at 8% would raise £9bn over four years.

Commenting on the new energy price, which will see bills rise in October, TUC General Secretary Paul Nowak said: 

This bill rise will be another hammer blow for those struggling to get by.

Households up and down the country are already up against it. Too many are skipping meals, dipping into savings and having to cut back on life's essentials.  

The government is going to have to keep going on measures to boost living standards starting with a tax on banks' enormous profits to cut energy bills for the majority of households.

It's the right thing to do. Banks are raking it in while many up and down the country are struggling to get by they can well afford to pay more tax.   

Liberal Democrats

Responding to the new energy price cap increase of 4%, set to take energy prices for millions of households to their highest levels in 3 years, Pippa Heylings MP, Liberal Democrat Spokesperson for Energy Security and Net Zero, said: 

This latest rise in the price cap has wiped out the small savings from Andy Burnham's cut of VAT on electricity bills, proving that continuity Starmerism will keep families stuck in a financial mire.

The Prime Minister must wake up to the scale of the challenge and accept that bold change is needed to bring bills down.

That should start with our radical plan for an Essential Energy Guarantee, taking profits from energy networks and using them to bring down costs on the essential energy used by households. We also need to fix the broken electricity market and decouple wholesale gas price from electricity so people can finally benefit from cheap, clean power

New Economics Foundation

Alex Chapman, head of economic and environmental policy, at the New Economics Foundation (NEF), said: 

"Today's price cap announcement will be frightening news for families up and down the country, many of whom are already struggling to afford the essentials. Getting people's energy bills down as we go into winter must be a top priority for this government. At the next budget they should implement a National Energy Guarantee - which would provide every household with a cheap portion of essential energy.  

"But we also need to be clear about the causes of this energy price roller-coaster: our continued reliance on fossil fuels. To achieve greater stability over prices, we need to transition to a system that uses reliable renewable energy - like wind and solar. Crucially, more drilling in the North Sea isn't a viable solution to rising prices, as we'd still be dependent on the international fossil fuel energy market.