Energy bills rocket by up to £250 but Brown pledges housing help

Tens of thousands face paying more than £250 extra a year.

Moves by npower and Scottish Power to increase their gas and electricity tariffs mean all of the "Big Six" suppliers have now pushed through big rises this summer.

The news came amid warnings that house prices could fall by up to 30 per cent and as news emerged of Gordon Brown's economic recovery plan.

Both npower and Scottish Power said they had made the decision to increase prices "reluctantly" but had been given no choice because of "massive increases in wholesale costs".

German-owned npower, which has around 200,000 customers in London and 300,000 elsewhere in the South-East, said its electricity was going up by 14 per cent and gas by 26 per cent.

For dual-fuel customers that will add £214.55, or 22 per cent, to a typical bill taking it to £1,186.31 a year.

Scottish Power, which is thought to have at least 100,000 customers in the region, is increasing its electricity price by nine per cent and gas by 34 per cent.

Its dual fuel customers will face an average £259 increase, taking their bills to £1,299 a year.

Giuseppe Di Vita, managing director of npower, said: "We've made this decision extremely reluctantly. Npower is investing heavily in new, cleaner generation. Britain needs 20 new power stations by 2020 and that's why, each and every year, for the next 10 years, we plan to spend more than we earn to ensure the lights stay on."

The increases are a blow to householders and the Prime Minister whose recovery plan, to be unveiled next week, will include emergency moves to help struggling home owners and first-time buyers.

Housing minister Caroline Flint is preparing to launch proposals that would allow councils to buy repossessed and unsold properties.

The key measure would be a selective mortgage-to-rent scheme that would allow residents to stay put in their own home if they defaulted on their mortgage.

However, Chancellor Alistair Darling remains unconvinced about a more radical plan to allow councils to compete as mortgage lenders with access to a £2billion pot of government borrowing.

Town hall chiefs welcomed some of the proposals but warned that more help was needed.

Tory Paul Bettison, the Local Government Association's spokesman on housing, said: "The amount of money made available may not be enough to make a significant difference."

Labour's fears of a full-blown recession were underlined by a startling warning from one of the Bank of England's senior policymakers.

Professor David Blanchflower, who as a member of the Monetary Policy Committee votes on the interest rate the Bank sets, said that two million Britons may be out of work by Christmas and big cuts in interest rates are needed now to stop the economy heading into a deep and prolonged slump.

Hewarned that things could get even worse, with 30 per cent falls in house prices and described the Bank's forecast this month of the economy standing still over the next year as "wishful thinking".

Calls for corporation tax cuts were redoubled today after it emerged that two more big British businesses - engineering firm Charter and investment managers Henderson Group - were relocating their headquarters to Ireland because of its lower taxes.

Shadow chancellor George Osborne wrote to Alistair Darling to urge the Chancellor to adopt Tory plans to cut corporation tax and simplify business taxes.

"As you demonstrated in last year's pre-Budget report, you are capable of adopting Conservative proposals," Mr Osborne wrote.

"With companies leaving Britain, weakening an already ailing British economy, I urge you to adopt our proposals in order to restore our competitiveness and help prevent any more companies from deciding to leave the UK."