Ofgem energy cap rises to £1,723 as Healey faces calls for budget support

Ofgem’s energy price cap rose by 4% to an annualised £1,723 for a typical direct-debit household in England, Scotland and Wales on 1 October 2026, bringing fresh calls for Chancellor John Healey to offer more support in the 28 October budget. The increase took effect alongside a temporary cut in VAT on household electricity, which the government says will save an average of £45 a year.

The new figure applies to the cap period from 1 October to 31 December. It is an illustration based on typical consumption, average unit rates and standing charges, rather than a fixed maximum bill. What a household pays depends on its energy use, region and payment method. Ofgem publishes different rates for direct-debit customers, people who pay on receipt of a bill and prepayment customers.

What changed in Ofgem’s October energy cap

For direct-debit customers, Ofgem lists electricity at 26.32p per kilowatt-hour and a daily standing charge of 54.83p for October to December. Gas is listed at 7.97p per kilowatt-hour, with a 29.68p daily standing charge. Regional rates vary, so those national figures cannot be used to calculate every household’s bill. The regulator says the October cap is 4% above the preceding period.

Electricity bills also changed because qualifying domestic supplies in Great Britain moved to a temporary zero VAT rate on 1 October. HM Revenue & Customs says the measure runs until 31 March 2027; other domestic fuels remain subject to 5% VAT. Ofgem says its published gas rates include that 5% tax and cautions that rates cannot be compared directly with the previous period because the tax treatment has changed.

Why Healey faces calls for more energy support

The cap’s start date turns the previously announced October increase into the rate now in force. NewsJaws earlier explained the October cap in its coverage of Ofgem’s £1,723 decision. Heather Stewart, Richard Partington and Jillian Ambrose reported for the Guardian on 1 October that campaigners, charities, unions and thinktanks had written to Healey and Energy Secretary Miatta Fahnbulleh seeking both support available to all households and targeted help for those most in need. Their calls concern the approaching budget; the reported proposals have not been adopted.

TUC general secretary Paul Nowak called the situation an ‘energy bill emergency’ and urged ministers to ‘go further and faster’ at the budget, according to the Guardian. The New Economics Foundation proposed a ‘national energy guarantee’ under which every household would receive a basic amount of energy at a fixed low price and pay market prices for consumption above that level. That is a campaign proposal, with no government commitment to introduce it.

Cost of Living Action had set out a related demand in July, when it called for an ‘essential energy guarantee’ and wider energy-system reform in a letter to Prime Minister Andy Burnham. That earlier letter shows the campaign’s existing position. The Guardian’s 1 October reporting establishes the more recent appeal to Healey and Fahnbulleh; the July letter does not establish the later letter’s full wording or signatories.

What ministers have said before the 28 October budget

Healey told Labour’s conference that the government had limited resources to cushion global economic shocks, while promising ‘a bit of breathing space’ for households and businesses, the Guardian reported. Burnham said on Wednesday that Labour ‘will do our best’ but had no ‘huge room for manoeuvre’ for further action. Those comments set out financial constraints, not a decision on the requests now being made.

Responding to the campaigners, Fahnbulleh said the electricity VAT cut makes the cap £45 a year lower than it otherwise would have been. She also cited the £150 removed from bills earlier this year and said the government continued to consider how to protect families from unaffordable bills. Her response did not announce another measure for the October budget.

The Guardian reported pressure to extend the VAT holiday and to move levies supporting clean-energy projects and grid upgrades from bills into general taxation. It said Fahnbulleh was reportedly considering changes that could save customers an average of £120 a year, potentially requiring as much as £3bn in higher taxes. Those figures describe reported options and possible costs, not an approved plan or a saving households can count on.

What happens after the October cap

Cornwall Insight forecasts a further 16% rise in the cap from January, to £1,999 for an average annual dual-fuel bill, according to the Guardian. That is a forecast, not an Ofgem decision: the January cap and any further government response remain unsettled. For now, the confirmed changes are the £1,723 typical-use cap through December and the temporary zero VAT rate on qualifying household electricity.