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Martin Lewis issues warning over 'frightening' energy bills

(Left-right) Penny Mordaunt, Rishi Sunak and Liz Truss at Here East studios in Stratford, east London, before the live television debate for the candidates for leadership of the Conservative party, hosted by Channel 4. Picture date: Friday July 15, 2022. (Photo by Victoria Jones/PA Images via Getty Images)
(Left-right) Penny Mordaunt, Rishi Sunak and Liz Truss are the final three contenders for the Tory leadership. (Getty Images)

Martin Lewis has called on Conservative candidates vying to be the new prime minister to tackle the cost of living crisis urgently, warning the UK faces a “potential financial cataclysm” this winter.

Consumer champion Lewis made an impassioned plea for the prospective new PM to take action immediately to address “frightening” energy bills.

He accused the Tory candidates of ignoring the issue so far during the two leadership debates held in the past week.

Liz Truss, Penny Mordaunt and Rishi Sunak will battle it out to succeed Boris Johnson as Tory leader after Kemi Badenoch was eliminated on Tuesday.

Read more: UK living standards fall at record rate as inflation soars

Energy bills are projected to soar even higher this winter. (Cornwall Insights)
Energy bills are projected to soar even higher this winter. (Cornwall Insights)

“The Conservative Party leadership candidates, one of whom will soon become our prime minister, need to know how stark things will be on the day they take office," Lewis said in a social media video.

“So far, the debate seems to have mostly ignored the fact we are sitting on a financial time bomb that's due to explode in September. And those candidates in truth are the only ones with a chance of defusing that catastrophe.”

The latest predictions by analysts Cornwall Insights predict the energy price cap will rise to £3,304 this winter - more than double the year before.

In May, Ofgem had initially predicted the cap would increase by a further £830 to £2,800 in October, following an increase to £1,971 in April.

Read more: Inflation expected to have soared even higher in June as cost crisis ramps up

Money Saving Expert's Martin Lewis during a joint press conference with Facebook at the Facebook headquarters in London. (Photo by Kirsty O'Connor/PA Images via Getty Images)
Martin Lewis has sent a stark warning to Tory leadership candidates about the cost of living crisis. (Getty)

Lewis warned direct debits would already be going up by the time the new prime minister took office in September, adding the increase in price cap predictions meant the £400 government grant would be swallowed up.

He added: “The awful sickening news is it is (price cap) now predicted to rise 65% again, taking the bill for somebody on typical use to £3,240 pounds a year. And that may be a conservative estimate because it keeps going up.

Lewis said although there was more money available for those on benefits, state pensions and with disabilities, the amount being given was based on predictions in May and it would not be enough.

He said: “Remember that direct debits will be rising before the new PM is in situ and that means people will be panicking. There's a risk to mental as well as physical health.

“These rises are unaffordable for many on the lowest incomes. And while tax cuts will help some people leave the inflationary risks to others."

Communal payments. Utility billing sheet, calculator, pen and envelopes on a blue velvet background
Energy bills are set to rise higher than predicted in October. (Getty)

Lewis said the rises when added to the increasing costs of food and transport and other inflation meant many would again face a choice between starving and freezing this winter.

Ex-chancellor Sunak previously unveiled a package of cost-of-living support which included:

  • One-off £650 payment to more than eight million low-income households on Universal Credit, tax credits, Pension Credit and legacy benefits

  • One-off payments of £300 to pensioner households and £150 to people receiving disability benefits.

  • Households receiving a £400 discount on their energy bills from October.

Foreign secretary Truss has committed to a temporary moratorium on the green energy levy, which she hopes will cut £153 from people’s energy bills. It would cost around £5 billion per year.

Trade minister Mordaunt has pledged a 50% cut in VAT on fuel to help with the cost of living crisis.