Urgent plea over 'inhumane' energy price change
Amid rising energy tariffs, finance experts and charities are urging for measures to aid struggling households. Ofgem, the industry watchdog, has announced an upward revision of the price cap affecting gas and electricity unit costs starting January 1, coinciding with the winter chill.
Households face a 1.2 percent increase equating to an additional £21 for the average household annually, elevating the typical yearly bill to £1,738. Such increases hit harder as over nine million pensioners have lost their annual Winter Fuel Payment of up to £300, essential for managing heating and lighting expenses.
Caroline Abrahams, Charity Director at Age UK, commented: "Older people, struggling without their Winter Fuel Payment, who were praying for a reduction in energy prices to help them in the New Year, will be bitterly disappointed today."
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Furthermore, she highlighted the wider impact of the change: "The news that the energy price cap is instead slightly rising is the latest in a series of blows for pensioners living on a low or modest income, who do not receive Pension Credit because they don't claim it or are not eligible."
Emphasizing the dire circumstances, she added: "There are millions of older people in this situation and we know that many are hoping against hope that something will turn up to help ease their situation over the next few months, when the weather is at its coldest."
"If you are an older person for whom every penny counts, managing your energy bills until the rise in your State Pension starts coming through from April, just got harder."
StepChange Debt Charity, the UK’s largest debt advice charity, has highlighted that energy bills continue to be a significant strain on household finances, especially for those on lower incomes, with many owing thousands of pounds to their supplier. The average energy arrears of its clients currently stands at £2,516, a figure that has surged by 23 percent since the beginning of the year.
A YouGov poll conducted in September revealed that over one in four (27 percent) people receiving benefits have had to ration their heating, electricity or water usage to keep up with credit repayments in the past three months. Richard Lane, Chief Client Officer at the charity, described the increase in tariffs as "a blow to consumers who are already facing considerable cost of living pressures".
Simon Francis, coordinator of the End Fuel Poverty, warned: "As the temperatures plummet, a fourth winter of the energy bills crisis looms large in people’s minds."
"The decision to introduce a price cap change in the middle of winter was taken by Ofgem in 2022 and was described as an inhumane policy at the time. No wonder it has been opposed by campaigners ever since as households will have to find more money to keep themselves warm at the worst possible time. To make matters worse, the new Government has cut back the levels of support available to some of the most at risk households."
He added: "While we welcome the Government’s long term plans to boost home energy efficiency to bring down bills and to improve energy security by stabilising prices, these reforms will take time to take effect and will be no comfort to those struggling this winter."
"That’s why it is so vital the ministers bring in more support for vulnerable households this winter and speed up plans to bring in a social tariff for next winter - a move that is backed by the vast majority of voters."
Warm This Winter spokesperson Caroline Simpson said: "It’s freezing this week and now we have another price cap rise which is devastating to the 6.5 million in fuel poverty and all of us who will be paying 66 percent more on energy than we did before the start of the energy crisis."
"We desperately need to get on with the job of ramping up our supply of homegrown, renewable energy, which is abundantly available to us on this windy island and a properly funded programme of insulation and ventilation to upgrade our leaky homes."
"Homegrown renewables are the only way we will cut our bills for good but whilst that kicks in we also need commitment from the government that vulnerable households will be supported with their energy bills this winter and next with a social tariff funded by the energy sector's vast profits. In this day and age, nobody should be afraid to turn on the heating because they can't afford to pay for it."
Ben Perks, Managing Director at Orchard Financial Advisers, commented: "The battle between households and their bills rages on. Disposable income is fast becoming a thing of the past."
"Families are cash strapped and another uncontrollable increase will leave many with their head in their hands wondering, 'when are we going to catch a break? ' Something needs to change and urgent action is needed from this Government to get control of the economy and put more money in people’s pockets."
Ranald Mitchell, Director at Charwin Mortgages, articulated to Newspage: "Even a small rise like this is another turn of the screw for households already grappling with high costs."
"It’s a stark reminder that energy affordability remains a critical issue, and we need urgent progress on long-term solutions like renewable energy to shield families from this relentless financial strain. The pressure on people's finances is growing all the time."
Riz Malik, Independent Financial Adviser at R3 Wealth, expressed concern: "The rise in the energy price cap is another financial strain for households across the country. It comes as mortgage rates and rents also rise."
He further added, "Only a month ago many of us believed that things were going to get better, but now they look set to get worse. When will the government understand that higher bills means less discretionary spending, which in turn hits the economy’s growth prospects? " Highlighting a significant issue, Malik asked, "The question remains, why are our energy costs substantially greater than those of many other countries?"