Crunch Point: Protecting households from record energy bills in the coming months

Crunch Point: Protecting households from record energy bills in the coming months [ 1.6 mb]

This April energy prices are set to increase by 54% and households will face an average annual bill of nearly £2,000. At the same time, general inflation is forecast to hit 8%, pushing up many costs including the price of a food shop. In October, annual energy bills could hit £3,000 as the wholesale price of gas soars. Citizens Advice found that despite the government’s support measures:

  • 5 million people will be unable to afford their energy bill when prices rise in April.

  • 14.5 million will be unable to afford their energy bills from October.

Everyone is feeling the impact of the cost of living crisis, but some will be hit harder than others. People who pay as they go for their energy on prepayment meters are less able to spread the cost of energy throughout the year and will face huge hikes next winter:

  • Rising energy costs could see an average household on a prepayment meter facing bills of £336 – over £10 a day – in December 2022. That same usage would have cost them £147 in December 2021.

  • In January 2023 – a month when finances are already tight for many – prepayment customers will have to find an estimated £360 to cover their energy costs, or risk being cut off.

People on low incomes are most likely to be unable to afford price rises from April. Polling commissioned by Citizens Advice shows that nearly half (47%) of people on low incomes predict that they will fall behind on their essential bills, or cut back on essential spending.

The government has announced a package of support to help people manage April and October’s price rises. This is made up of a £150 grant in April and a £200 loan in October. But more than 8 in 10 (83%) of people we spoke to said that they did not think that the £200 energy loan would make a significant difference to their ability to pay their bills.

The government should put in place both broad and targeted support to mitigate the impact of price hikes:

  • Uprate benefits in April to better reflect the cost of living.

  • Support households in October through a more generous, non-repayable Energy Rebate and an expanded Warm Home Discount scheme.

  • Better target existing energy efficiency schemes and help consumers make the right choices to decarbonise their homes.

Ultimately, government will need to implement a ‘Marshall Plan’ for energy efficiency nationwide to decarbonise homes and reduce our reliance on gas.

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