Starmer urged to convene emergency four nations energy bills summit
Household bills could jump by £332 a year in July, according to the latest forecasts
Sir Keir Starmer has been urged to convene an emergency four nations summit after it was forecast household energy bills could jump by £332 a year in July following the escalation of conflict in the Middle East.
It came as motorists were warned further rises at the pump are “inevitable”, with the cost of filling a typical family car with unleaded now £6.40 more than at the start of March, while the figure for diesel is £13.
Downing Street has urged the public to carry on “in normal fashion” despite mounting concerns about major disruption to the global oil market.
The International Energy Agency (IEA) on Friday suggested governments should consider advising people to work from home more to reduce demand for oil amid the fallout from the Iran war.
Warning the conflict had triggered “the largest supply disruption in the history of the global oil market”, the IEA said widespread adoption of measures to rapidly cut demand would “help cushion the shock”.
The agency’s list of ten measures also includes encouraging public transport usage and car-sharing, avoiding air travel and cutting speed limits by 6mph.
The outbreak of war in the Middle East has seen Iran effectively blockade the Strait of Hormuz, a key shipping lane that carries around 20 per cent of global oil consumption.
The blockade has seen oil prices jump above 100 dollars per barrel, despite the release of 400 million barrels from emergency reserves on March 11, and sparked concern that continued disruption could lead to fuel rationing.
The UK government has been keen to play down the prospect of rationing, insisting Britain is well stocked with fuel.
Analysts Cornwall Insight said forecasts for Ofgem’s energy price cap from July to September had surged to £1,973 a year for a typical dual fuel household – an increase of £332 or 20 per cent on April’s cap.
This marks a significant step up on its forecast from just over two weeks ago, when it had predicted a 10 per cent increase from July.
The independent energy consultants are updating their forecasts every week while the US-Israel war with Iran escalates and the energy market is volatile.
Cornwall said household energy bills over the summer look set to be higher than it had anticipated.
Even if wholesale prices quickly returned to pre-conflict levels, some of the recent volatility will be baked into the next price cap, which covers July to September, it said.
However, the figure is likely to change and the size of the increase to the next price cap will depend on how long gas prices stayed elevated and how long the period of disruption continues.
Ofgem’s price cap is based on average wholesale prices over a three-month period.
A spokesman for the UK government’s Department for Energy Security and Net Zero said Cornwall’s forecasts are “highly speculative”, adding: “Using wholesale price fluctuations to predict what will happen in the next few months is not reliable.
“Tackling the affordability crisis is the government’s number one priority. That is why we are acting to bring bills down now and for the long term.”
The price most households pay for energy will fall by 7 per cent from April 1, or £117 a year, driven by the government’s promise to cut bills by an average of £150 by removing green subsidies.
However, gas prices have been climbing in recent weeks, and this could feed through into future electricity prices and how much it costs to heat people’s homes.
Meanwhile, the UK’s competition watchdog is looking into concerns that households relying on heating oil are facing sudden price increases on the back of the conflict.
Home heating oil, which is used by around 1.5 million households in the UK, including around 130,000 in Scotland, is not covered by Ofgem’s price cap, which currently fixes prices until the end of June.
The Competition and Markets Authority (CMA) said on Friday that it had launched a market study into the supply of heating oil to see how it was impacting consumers and whether it needs to intervene.
First Minister John Swinney said: “Energy bills are estimated to soar again by £332 from July. Households cannot afford to take another hit. I am calling on the Prime Minister to urgently convene a four nations emergency summit and freeze the price cap now.”
His call was backed by Northern Ireland’s First Minister Michelle O’Neill. “There must be immediate and meaningful action to support all workers and families,” she said.
SNP Westminster leader Stephen Flynn said the forecasted rise in bills would be a “hammer blow” for struggling households.
"The Prime Minister must confirm he will freeze the price cap and urgently convene an emergency four nations summit of the UK and devolved governments to ensure that households and businesses get the support they need,” he said.
Responding, a spokesman for the Department for Energy Security and Net Zero said: “The government will fight people’s corner to tackle the cost of living crisis.
“Thanks to the actions we took in the Budget, the price cap is fixed until the end of June – meaning household energy bills will go down for its three-month duration.
“We’re determined that the country learns the right lessons from this war. Families and businesses will continue to pay the price if the UK is dependent on fossil fuel markets that we do not control.”
Simon Williams, head of policy at the RAC, said the pressure on household budgets is “beginning to intensify”.
He said: “Since the conflict began, average petrol prices are now almost 12p (9 per cent) higher at 144.51p a litre, with diesel up by twice that amount (24p, 17 per cent) to 166.24p.
“Diesel drivers have seen prices rise by 2p over the last two days alone. The cost of filling a typical family car with unleaded is £6.40 more now (£79.48 for a tank) than at the start of March, while the figure for diesel is a hefty £13 (£91.43 for a tank).
“The oil price has been consistently above the $100 a barrel mark this week, so unfortunately further rises look all but inevitable going into next week.
“The average price of a litre of unleaded is likely to reach 150p, and diesel possibly 180p, by Easter. With many people heavily dependent on the car, the pressure on household budgets is beginning to intensify.”
It came as government borrowing costs hit their highest level since the 2008 financial crisis as worse-than-expected public finance data compounded a gilt sell-off on worries over soaring inflation and rising interest rates.
Yields on 10-year UK government bonds, also known as gilts, surged above 4.9 per cent at one stage on Friday, up from 4.78 per cent on Thursday and hitting an 18-year high.
Two-year gilts were also up another 11 percentage points at 4.52 per cent on Friday after reaching their highest since January 2025 on Thursday in the worst one-day sell off for the short-dated bonds since the mini-budget market chaos in 2022.
Yields move inversely to prices, meaning they rise as prices fall.
Official figures showed government borrowing last month jumped unexpectedly to the second highest February level since records began.
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