The boss of one of the UK’s fastest-growing energy suppliers has said Britain must find £20bn to rein in soaring household bills that have compounded fears about a cost-of-living crisis in 2022.
Greg Jackson, the chief executive of Octopus Energy, said his company did not know yet how much bills would rise in the run-up to 7 February, the deadline when the regulator Ofgem sets a new cap on what suppliers can charge customers.
The record wholesale gas prices across Europe has led to forecasts that average annual bills in the UK could leap from £1,277 to more than £2,000 when the cap comes into effect in April.
Jackson said talks between energy suppliers and the government would have to find a way to avoid global gas prices being passed directly on to consumers.
“We’ve got to recognise that as a result of the pandemic, every sector is asking the Treasury for help and there’s not an infinite supply of money,” he said.
“The reality is that the UK buys most of its energy on a global market and we’ve had to pay about £20bn more than usual this year. So, in some way or another, the UK is going to have to pay that money.”
Octopus, a renewable energy provider, is one of the fastest-growing companies in the sector, with 3.1m customers. It has been at the heart of industry talks with business secretary, Kwasi Kwarteng, who is said to be determined to avoid bailing out large energy companies.
Jackson has been a leading proponent of an alternative £20bn loan scheme, under which a commercial lender makes a fund available that suppliers can dip into in order to refrain from hitting customers with sudden hikes in their energy bills.
The suppliers could then pay the lender back over time with the money they make from staggered price increases, cushioning the blow to household finances.
Jackson said the sector should explore the plan, which may need government oversight but not necessarily any state funding, “before we go looking for help from the public purse or elsewhere”.
“The energy sector has always had large access to private finance,” he added.
Asked whether a windfall tax should be imposed on North Sea oil companies that have made money from higher gas prices to help fund lower bills, Jackson refused to dismiss the idea. He added that it should be separate from broader efforts to reduce household bills.
The expectation of rising gas bills adds to wider fears that 2022 will be characterised by a massive squeeze on the cost of living that could push more people into poverty and upend British politics.
UK households face a hit of £1,200 this year, according to the Resolution Foundation thinktank, with more expensive energy bills piled on top of rising taxes and the effect of stalling wage increases.