Energy boss warns 4 in 10 households facing fuel poverty

A staggering 40 per cent of households will be living in fuel poverty if the government sits on its hands while bills soar, an energy firm chief is warning.

“Some people are at the edge. They simply cannot pay and that will get worse once prices go up again in October,” Michael Lewis, the chief executive of E.ON, said – also revealing that one-third of its customers are slashing spending on food.

Mr Lewis called for immediate government intervention, but declined to say whether that should be a windfall tax on the profits of the energy producers, amid a cabinet row over the controversy.

He called for the “broadest shoulders” to bear the burden, telling the BBC: “The most important thing is that the government intervenes – it is up to the government to decide how they fund that.”

Mr Lewis suggested the annual energy price cap could reach as high as £3,000 in the autumn, compared with the £1,277 that families were paying before April.

Rishi Sunak has rejected calls to reverse his £20-a-week cut to Universal Credit payments, forced through last year despite warnings that inflation was about to soar.

Asked if increasing the benefit was a solution, Mr Lewis replied: “Absolutely, it will help the people at the bottom of the income range who are most affected by this.”

Analysts have warned that the UK is heading for the worst plunge in living standards since the 1950s, and an explosion in poverty that will push 500,000 more children below the breadline.

Boris Johnson and Mr Sunak have been locked in talks about how to tackle the crisis, examining a second council tax rebate and higher warm home discount payments for the most vulnerable people.

No 10 has suggested it opposes a windfall tax as “ideologically unconservative”, but the chancellor appears keen to press ahead with what has been dubbed “windfall tax lite”.

It would impose a lower rate on energy firms prepared to invest billions of pounds in the economy, possibly in new nuclear power stations and offshore wind farms.

The many weeks of confusion and cabinet backbiting over how to deal with soaring household bills have hurt the government, leaving Tory MPs frustrated by the impasse.

Fuel poverty is a term used to describe households who have to spend more than 10 per cent of their disposable income on home energy.

“That’s risen to around 20 per cent and, in October, our model suggests that could rise to 40 per cent if the government doesn’t intervene in some way,” Mr Lewis warned.

Nadhim Zahawi, the education secretary, said Mr Sunak would “look at all the options” ahead of an expected support package before the new price cap is unveiled in August.

“The chancellor will see how he can target help to those who need it most,” Mr Zahawi said.

“He is on people’s side and he will deliver that help,” he insisted, adding: “He will go even further.”