Energy bills will rise above inflation for 17 years
Water and Energy bills could continue to rise above inflation for at least another 17 years according to government watchdog, the National Audit Office (NAO).
The NAO predicts that bills will be pushed up due to plans to replace the UK’s aging infrastructure at a cost of £310 billion.
Two thirds of the £310bn is expected to come from the private sector which will ultimately be paid for from consumers’ water and energy bills.
The NAO has also said that the government has little idea of the impact the move will have on the average household or if the rise in bill will even be affordable for many.
The office also warned that the combined pressure of falling income and rising prices means that low income households are spending a larger portion of their income than the average household.
The figures showed that low income household pay around 15% of their income just on energy and water bills while the average UK household pays nearer to 8%, nearly half the amount.
Exeter Citizens Advice Bureau Chief Executive Steve Barriball said: “Consumers need answers, not more bad news. There is a desperate need for wholesale reform of the energy market and a sustainable plan for how Britain’s energy needs will be met in the future.
"An affordable energy market requires investment and the National Audit Office report shows just how important it is to plan now so that consumers aren’t facing unplanned costs that they simply can’t afford.
"An extra £200 on top of current prices would break many households which are already forced to make the impossible choice between heating and eating.”
In a statement released today the NAO warned: "Gaps in analysis, and the lack of a common approach to measuring affordability, mean that the Government does not have an overall picture of affordability, either for the average household or for those on low incomes.
The news comes after yesterday saw EDF energy raise their energy prices becoming the fifth out of the ‘Big Six’ energy companies to do so.
The move by the six bug energy companies saw energy sectary Ed Davey, warn energy companies that to avoid “the reputational fate of the banks” warning them not to treat customers like “cash cows”.
Speaking at the Energy UK conference Ed Davey, said: "Fair or not, they look at the big suppliers and they see a reflection of the greed that consumed the banks."
Earlier this month, the Environment Secretary Owen Paterson, wrote to water companies urging them to keep water bills affordable.
In a letter he wrote: “We know household budgets are under pressure and keeping water bills affordable is a crucial way we can help hardworking people.
“That is why we are pressing hard to make sure customers get a fair deal by encouraging water companies to look closely at any price increases.”
Neil Dhot, Head of Corporate Affairs for Water UK, an organisation that represents the UK water and wastewater providers, said "Water companies have invested over £110 billion over the last 25 years to ensure that customers can rely on having high quality water supplies and to make our rivers and beaches cleaner, and at the same time as getting ever more efficient to keep customers bills as low as possible.
"The water industry understands the challenges faced by hard pressed households and will be looking to ensure that bills continue to be kept as low as possible. Water companies are currently working with their customer and stakeholders to finalise their investment plans up for 2015-2020. More up to date information on future investment and water bills will be available next month, when companies publish their plans."
The move in Energy prices came after an announcement from opposition leader Ed Miliband, stating that if elected Labour would freeze UK energy prices.
Mr Miliband, said: “Hot air from this Government won’t keep people warm this winter. The reason prices are still rising is because this Government refuses to act on overcharging by the energy companies – that’s why we need Labour’s energy price freeze.
“A Labour government will freeze energy prices until 2017, and we’d use that time to sort out the broken energy market.”
