Household energy bills across Great Britain are expected to reach a three-year high this winter, wiping out Andy Burnham’s much-advertised electricity tax cut before it even takes effect.
Cornwall Insight expects Ofgem’s energy price cap to rise by 4 per cent in October. That would produce an annual dual-fuel bill of £1,729 for a household using the regulator’s assumed amount of energy during the final three months of 2026.
Electricity prices are forecast to increase from 26.11p to 26.57p a kilowatt hour, while gas prices will rise more sharply from 7.33p to 7.90p. Cornwall Insight expects bills to rise again in January if current market conditions continue.
The October increase will more than swallow the £45 average saving promised through Burnham’s removal of VAT from household electricity bills. The tax cut was sold as giving working people “some breathing space” during the cost-of-living crisis. In practice, that space has already been taken back by the energy market.
The £1,729 figure also makes the increase look smaller than it would have under Ofgem’s previous calculations. The regulator now assumes that households use less energy than before — in large part because high prices have forced people to cut back. Under the old methodology, the October cap would be equivalent to £1,940.69 a year, up from £1,862 between July and September.
This is how deprivation is turned into statistical improvement. When workers can’t afford to heat their homes, their reduced consumption is built into the definition of a “typical” bill.
The price cap isn’t a cap on what any household will actually pay. It limits the standing charge and price charged for each unit of energy, so families on default tarrifs who have greater heating needs — including disabled people, older people and those living in badly insulated homes — can still face much higher bills.
Wholesale gas prices have climbed amid the war in West Asia. European heatwaves have also increased the use of expensive gas-fired power stations, adding further pressure to electricity prices.
Craig Lowrey, principal consultant at Cornwall Insight, said: “It is a stark reminder that our energy bills remain tied to events thousands of miles away. Moments like this are the strongest argument for reducing Britain’s reliance on volatile international gas.
“While temporary relief like VAT cuts help soften the blow, they don’t touch the underlying fact that Britain is heavily dependent on imports of natural gas. As long as we’re exposed to global markets, the risk of these price shocks will remain.”
Britain’s dependence on imported gas is real, but “global markets” aren’t a force of nature. They’re capitalist institutions in which energy is owned, traded and withheld as a commodity. Wars, sanctions, speculation and changes in demand are transmitted through wholesale prices, while Ofgem adjusts its cap to pass the resulting costs on to households.
The regulator doesn’t protect workers from the market. It manages the terms on which the market extracts payment from them. Gas becomes more expensive, suppliers pass on the cost, Ofgem raises the permitted price and working people are told to find the money.
Jess Ralston of the Energy and Climate Intelligence Unit said: “To many households this will feel like a horrible reminder of the first gas crisis after Russia invaded Ukraine. What’s even more worrying is that wholesale gas prices have reached a near four-year high, which is likely to cause more increases to future bills.”
But the earlier rise in gas prices wasn’t simply an unavoidable consequence of the Russia–Ukraine war. It was also caused by the British government voluntarily putting sanctions on Russian gas and joining the wider effort to force Russian energy out of European markets. That was a political decision taken by the British ruling class in pursuit of its imperialist strategy. Workers had no control over that decision, but they were made to pay for it through higher bills.
The same class relationship is visible today. Wars over territory, trade routes, resources and regional power are treated as distant matters of foreign policy until their costs arrive in workers’ homes. The ruling class pursues its interests abroad while presenting the resulting price shocks as unfortunate events beyond anyone’s control.
The government points to its VAT cut, the £150 Warm Home Discount for around six million households and its Warm Homes Plan. But these limited concessions leave the basic structure untouched. Heating and electricity remain commodities sold to those who can afford them, while the state’s role is largely to regulate the price rather than guarantee the need.
Burnham’s £45 tax gesture has been erased before it begins. That is the true measure of “breathing space” under capitalism: a concession small enough to disappear with the next movement in the commodity markets. The government can change a tax rate and Ofgem can change its formula, but workers remain the shock absorbers for every crisis produced by the capitalist and imperialist system. The wars are fought over wealth and power above their heads; the bills come through their doors.
