U.K. Faces Rising Utility Bills to Fund Infrastructure, NAO Says

U.K. consumers can expect their energy bills to rise by 18 percent more than inflation over the next 17 years, according to government projections included in a report by the National Audit Office.

Energy costs have become a central political issue since opposition Labour Party leader Ed Miliband pledged to make suppliers freeze prices for 20 months if he wins the 2015 election. The 176 billion-pound ($280 billion) cost of new infrastructure investment will have to be recouped from customers, the NAO said. The only available forecast of water bills, by a supplier, saw a 28 percent real-terms rise by 2030.

The price rises will hit the poorest hardest, the government spending watchdog said in the report published in London today. Energy accounts for 9.8 percent of the spending of the 10 percent of households with the lowest incomes, while water bills make up 5.3 percent. The NAO said the severity of poverty experienced by those at the bottom would worsen.

“Government and regulators do not know the overall impact of planned infrastructure on future consumer utility bills, or whether households, especially those on low incomes, will be able to afford to pay them,” Amyas Morse, the head of the NAO, said in an e-mailed statement. “It seems critical to know how much is too much, based on reliable information.”

Prime Minister David Cameron announced an investigation on Oct. 23 into profit and competition among energy suppliers.

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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