Ofgem’s decision on 26 August to lift the price cap by 4% on 1 October, to £1,723 a year for typical use, is a pass-through, and the regulator presented it as one. Neil Kenward, its director general for markets, said: “High international gas prices are continuing to drive energy costs in the UK.” Wholesale gas is priced on markets no British minister sets, in a year when the Strait of Hormuz has been closed and reopened. A cap is a rule for billing. It is not a policy for supply.
The distributional alarm that follows every such announcement runs some way ahead of the statistics. The Office for National Statistics puts the Gini coefficient for UK disposable income at 32.9% in the financial year ending 2024, against 35.4% before the pandemic and 34.7% a decade earlier. Inequality of original income, measured before direct taxes and cash benefits, has fallen 3.7 percentage points in ten years. What the figures describe is not a widening gap. It is a falling level.
Mean income fell 4.0% for the poorest fifth and 2.1% for the richest. Everybody lost. Nobody pulled away.
The same distinction holds across the Atlantic, where the costs within reach are domestic ones. American residential electricity rates rose 18% between January 2025 and April 2026, and 7.3% in the year to April alone, roughly twice the rate of inflation. The largest grid operator’s capacity auction cleared at $16.4bn. Utilities filed for $9.2bn of rate increases in the second quarter of 2026, 26% more than a year earlier. None of that is a distributional question. It is a construction question.
Travis Fisher of the Cato Institute, on the promise to halve electricity prices within eighteen months: “It was an impossible promise to deliver on because there really isn’t that much federal government involvement in retail rates.” The point generalises past the promise. Tariffs on imported transformers and electrical steel, offshore wind leases bought out with public money, load growth from data centres arriving faster than wires can be built — each raises the cost of delivering a kilowatt, and each was decided in a capital city.
Concede the obvious. A fuel shock is regressive. Petrol at an American national average of $4.097 a gallon, up from $2.79 in January, and above $4 in 31 states, takes a larger bite out of a commuting wage than out of a salary. A temporary, targeted, sunset-dated transfer to households nearest the edge is defensible and cheap. What it is not is evidence for a permanent programme, because the shock is temporary and the programme would not be.
Then look at where the same shock costs different amounts. A gallon of regular petrol averages $5.623 in California and $3.49 in Indiana — a difference of more than 60% inside one currency, one labour market and one federal government. That gap is made of taxes, refining capacity, pipeline access and fuel specifications. It is not made of inequality. Where a state has chosen to make energy expensive, its poorest residents pay for the choice first and hardest.
So the honest sentence is that this is a price, and prices answer to supply. Ofgem itself noted that fixed tariffs are available at £100 or more below the October cap, and that prepayment customers pay the lowest capped rates, saving about £45 against direct debit. Those are real savings and a reminder that a cap is a ceiling rather than a bill. The durable fix is more gas, more generation, cheaper delivery. Everything else is an argument about how to share a shortage.
