LABOUR was urged to reform energy pricing yesterday as unions and campaigners warned that a surprise 2 per cent rise in bills will hit 12 million homes already in fuel poverty.

GMB union hit out at the “never-ending cost-of-living crisis” after regulator Ofgem announced that the average household’s energy bill is to rise to £1,755 a year from October — despite wholesale prices falling by 2 per cent over the past three months.

Standing charges — the figure consumers pay per day to have energy supplied to their homes — are set to rise by 4 per cent for electricity and a whopping 14 per cent for gas, or 7p a day.

The 2.21 per cent year-on-year rise means average annual energy bills will be £713 higher than in winter 2020/21.

GMB national secretary Andy Prendergast said: “People are already struggling under rocketing inflation and a never-ending cost-of-living crisis.

“Any increase in energy prices could crash millions of household budgets.

“To make any green transition work, the UK has to be pragmatic: taking advantage of cheap gas prices to cut bills instead of subsidising heat pumps for the richest.

“The poorest in society must not be the ones who bear the biggest burden for saving our planet.”

Energy minister Michael Shanks blamed wholesale gas prices remaining 75 per cent above their levels before Russia invaded Ukraine. 

But End Fuel Poverty Coalition co-ordinator Simon Francis said: “We need urgent reforms to fix the broken pricing system, steps to ensure households benefit from targeted support for cold homes, a nationwide insulation and ventilation drive, reform of energy trading rules and lower standing charges.

“Meanwhile, expansion of renewables and upgrading the grid must be funded by investment or by tackling excess network and energy company profits, not by loading more costs onto struggling households.”

Pointing out that gas unit rates remain almost double pre-crisis levels and the cost of electricity in Britain is set by the most expensive generator — usually gas-fired power stations — he added: “It’s time for action — wind and solar are far cheaper ways of generating power and North Sea gas reserves are unable to meet domestic heating needs from 2027.”

Citizens Advice welcomed the government’s expansion of the £150 warm home discount to around 2.7 million more low-income households this winter.

But its director of energy Gillian Cooper said: “It’s high time for decisions about the longer term. 

“Our advisers are bracing for more calls as people struggle to top up their meters and pay the gas bill.”

National Energy Action said that low-income households need deeper energy bill support from government than the expanded warm home discount and winter fuel payment. 

It added that the Labour’s Warm Homes Plan needs to provide significant investment in the energy efficiency of the leakiest homes lived in by fuel-poor households. 

Energy Adviser Michael Penhaligon warned: “Every day my colleagues and I speak to people in desperate circumstances.

“They can’t afford the very basics of heat and power. They are rationing their energy usage and they’re cutting back on food and other essentials — the scale and depth of fuel poverty is far beyond the remit of any charity.”

We Own It director Cat Hobbs said: “Average annual bills of around £1,755 are still twice as high as somewhere like France, where electricity is nationalised.

“The government cannot leave it to the private sector to bring down energy bills and solve the climate crisis, it just won’t happen. 

“If the government is serious about bringing down bills, it has to get serious about proper public ownership of energy.”

Mr Shanks said: “Wholesale gas prices remain 75 per cent above their levels before Russia invaded Ukraine. That is the fossil fuel penalty being paid by families, businesses and our economy.

“That is why the only answer for Britain is this government’s mission to get us off the rollercoaster of fossil fuel prices and onto clean, homegrown power we control, to bring down bills for good.”