Tag: price cap

Decision on January price increase branded inhumane

Ofgem have confirmed that it will introduce a quarterly price cap increase on the energy bills of millions of people.

A spokesperson for the End Fuel Poverty Coalition commented:

Households will face a two-stage cost of living crisis this winter, thanks to Ofgem’s confirmation that energy bills will go up in October and again in January.

From October, millions of families across the country will face the real prospect of skipping meals to pay for energy, older people will shut themselves into one room to save on heating and disabled people will be unable to afford to charge vital equipment, such as electric wheelchairs.

Then in January, they will be asked to pay even more for their energy.

Ultimately, this decision will force more people into fuel poverty in the middle of winter, causing additional stress on the NHS and it may ultimately lead to increased levels of excess winter deaths this year. It is simply inhumane.

It’s clear that the Government and the Conservative Party leadership hopefuls just don’t get the scale of the problem facing the country, nor the public anger at rising bills. They are running out of time to act.

Only a full programme of emergency financial support, a rapid expansion of energy efficiency programmes and a commitment to bringing more cheap renewable energy on stream will help people stay warm this winter and into the future.

The decision comes after a week of massive increases in profits for energy firms, but with Centrica warning that its profits in its British Gas consumer division were hit by it having to ‘hedge‘ buying of energy due to the previous six monthly nature of the price cap regime.

Ross Matthewman, Head of Policy and Campaigns for the Chartered Institute of Environmental Health, said:

Ofgem’s decision to introduce a quarterly price cap confirming household energy bills for millions of people will increase substantially in the depths of Winter is a further blow to those already struggling amidst this cost-of-living crisis.

Industry experts estimate that the typical households would be faced with energy bills of £3,358 from October, then £3,615 from January 2023. This is up from average energy bills of £1,400 a year in October 2021.

Ofgem’s principal duty is to protect the interests of existing and future consumers. Following today’s announcement which will plunge millions into fuel poverty, it is clear that it is failing in its duty to consumers.

UNISON head of energy Matt Lay said:

The government must stop pretending it’s done enough. Support for consumers has so far been pitiful. Other European governments have been both swifter and bolder to lessen the blows from big bills.

All but the richest consumers face a terrifying prospect this winter. Many simply don’t have the means to pay. Swift and radical government action is needed to cap the horrific price hikes predicted. Otherwise, there will be a crisis of unimaginable proportions.

£3,000 energy bill could leave 8.5 million UK households in fuel poverty 

The End Fuel Poverty Coalition has issued a warning today that the energy crisis could leave 8.5 million UK households unable to heat and power their homes.

The group, which represents over 50 organisations, claims that cold homes cost lives and that more frail and older people could die next winter without further action from the Chancellor in his Economic Statement in March.

The campaigners are pleading with the Government to cut bills for the most vulnerable households comes as wholesale prices soar due to Russian invasion of Ukraine – with stark predictions that energy bills across Great Britain could increase to £3,000 per annum. 

Adam Scorer, Chief Executive of fuel poverty charity National Energy Action (NEA), commented: 

When energy bills hit £2,000 a year there will be over 6 million UK households in fuel poverty.

Analysts suggest the war in Ukraine could drive average bills to £3,000 per year.

This could leave 8.5 million UK households in fuel poverty, denied a warm safe home.

This is a disaster and inevitably, will lead to more needless winter deaths.

Government must address the scale of the problem and use the upcoming Economic Statement in March to cut energy bills much further for the poorest. It must act now, to protect the most vulnerable, and to save lives.

Age UK, the leading charity for older people, highlight how cold homes threaten the frailest in society and the crisis should prompt a re-think about the adequacy of the UK Government’s support package for those on the lowest incomes.

Age UK’s Charity Director, Caroline Abrahams, comments:  

Energy price rises have pushed older people’s budgets to breaking point, with many going without heating for weeks over the winter. The impact on their health and wellbeing is likely to be devastating, just as it seemed we and the NHS were getting some respite after two years of a pandemic.

The support the Government have announced is nowhere near enough. How are those on the lowest incomes, who already struggle to afford the essentials, going to find an extra £350 to cover their energy bills, on top of all the other increases in the cost of living?

We are really concerned about those using prepayment meters – typically a more expensive way to pay for your energy – and how many will ration and disconnect from their supply.

With further increases expected in the autumn, and uncertainty intensified by the invasion of Ukraine, the Chancellor must do more to help and ensure that those on low and modest incomes can afford to stay warm without worrying sick about their bills.

 The charities say the impacts of cold homes on the most vulnerable people are well known to the UK Government but without more support, the situation will prompt more needless deaths next winter. 

A spokesperson for the End Fuel Poverty Coalition, concluded: 

Ending fuel poverty is a public health necessity and a national security priority. Based on World Health Organisation modelling, an estimated 80 frail and elderly people die prematurely every day across the UK each winter.

Unless more support can be provided, the scale of these tragic needless deaths will grow and cause even further devastation to other poorer households.

We need urgent help for households in fuel poverty now combined with a long-term plan to improve energy efficiency of our homes and a sustainable, renewable-led, energy mix.

Notes to editors

Alongside similar unprecedented increases in Northern Ireland, the GB price cap is now being raised from 1st April, a jump of an additional £700 per year to leave the ‘average’ domestic energy bills at £2000, leaving a further 2 million households in fuel poverty. Due to reductions in household incomes, surging energy prices and relatively modest improvements in energy efficiency levels, charities estimate that the number of households in fuel poverty across the UK will increase to 6.3-6.5 million households in total in April, an increase of more than 50% in just over six months. This projection is based on the 10% definition of fuel poverty which gives a realistic picture of the scale of fuel poverty in periods of more volatile energy prices. On 24th February Investec Bank Ltd estimated the price cap on energy prices could spike another 50% in October to more than £3,000 per household following huge gains in the wholesale natural gas and electricity markets.  

Last month the UK Government released new fuel poverty statistics. These statistics do not capture the recently announced huge hikes in energy bills. However despite a long lag in the Government data for England; these new statistics highlighted a lack of progress to meet the UK Government’s statutory fuel poverty commitments with warnings it will take over 60 years for the Government to meet its statutory fuel poverty commitments. 

As well as addressing the worrying lack of sufficient emergency support for the energy crisis, the charities highlight in 2019 the Conservative party manifesto made a welcome commitment to help lower energy bills by investing £9.2bn in the energy efficiency of homes, schools and hospitals in England, including £2.5bn for the Home Upgrade Grant Scheme (HUG). HUG is vital as it targets low-income households in the least efficient, private tenure homes which are the most expensive to heat. But to date, less than half of the Government’s 2019 manifesto pledge has been committed. The UK Government also consulted last summer on welcome plans to extend and expand the Energy Company Obligation (ECO), Warm Home Discount (WHD) and Minimum Energy Efficiency Standards in the Private Rented Sector (PRS). They say these proposals were warmly welcomed by key stakeholders, but there has now been a long delay to implement these policies and further hiatus will continue to badly damage the health, wealth and well-being of the poorest households.    

Last winter Public Health England (PHE) warned there is a damaging overlap between the health impacts of living in a cold home and Covid-19. Pre-existing chronic medical conditions such as cardiovascular and respiratory conditions, such as chronic obstructive pulmonary disease (COPD), asthma and heart disease are also particularly badly affected by a cold home.  

Overall the Coalition and NEA estimate that based on a five year average, between 8000 to 10,000 people across the United Kingdom die prematurely during the winter due to the impact of cold homes. This is based on World Health Organisation modelling that at least 30% of Excess Winter Deaths are attributable to a cold home.

Image: Shutterstock

Energy bills set to hit highest peak since price cap introduced

Millions of people across Britain are set to be hit with the highest fuel bills since a price cap was introduced, according to a new analysis of data.

With wholesale prices increasing [1], Ofgem is set to announce an increase in fuel bills as early as 6 August. Around 15m people on default tariffs and pre-payment meters will be affected.

The move, estimated by Cornwall Insight analysts to see bills increase by £112 a year, will hit homes from 1 October [2]. Just as furlough comes to an end and the nation heads into winter. Such a rise would mean bills for homes on a standard variable tariff will be £226 higher than in February 2017. [3]

Calculations by the Coalition, provided to The Guardian, estimate that the price rise will force an additional 392,000 households into fuel poverty. [4]

  Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said:

Over 4m people are behind on their household bills and a second Ofgem price cap rise this year will be disastrous for the millions on the brink of fuel poverty.

Any price cap rise will only make matters worse for families struggling to make ends meet. At the same time, people are still reeling from the increases in bills caused by stay at home lockdown measures for the last 18 months.

While people’s attention is diverted by the rush out of lockdown, the reality is that the countdown to winter is on and it is a race against time. Any price rise – however small – will mean the choice between heating or eating becomes even starker later this year.

If that wasn’t bad enough, fuel poverty can make respiratory illnesses worse – meaning conditions such as Covid may be exacerbated by living in cold damp homes.

Short-term energy saving measures and shopping around for cheaper energy can help reduce bills, but the scale of the problem faced by people this year is huge and any increases during the pandemic and the recovery should be avoided.

We’d urge Ofgem and policy makers to think again about the price cap rise, or the Government to step in and provide emergency financial support to those who suffer due to the decision.”

Ruth London from Fuel Poverty Action, commented:

With thousands dying of cold every year the current energy pricing system – complete with price caps – is not fit for purpose.  As prices rise, a carbon tax rebate would help, but won’t solve this.

We need a new pricing framework, where poorer people don’t pay higher rates than the rich.

We need well-insulated housing, renewable energy, and wages and benefits that meet our costs. No special provisions or consumer protection will stop fuel poverty from killing pensioners and wrecking childhoods. The pandemic has taught millions that real change can’t wait.

Matt Copeland, Head of Policy and Public Affairs at National Energy Action said:

The price cap is an important measure to ensure that households are not exposed to excess profits in the energy market. However, if prices rise as is expected, Ofgem and Government must work together to help those worst affected by rising utility debt in order to avoid a devastating winter for people in and on the brink of fuel poverty. This must be combined with a long-term boost to spending to improve energy efficiency of buildings.

Without intervention, more people will remain cold at home during the winter, be more susceptible to respiratory illness, and unfortunately many will die. That is a truly unacceptable outcome, especially as the solutions to avoid it are well known.

Frazer Scott, CEO of Energy Action Scotland, commented:

More than a quarter of Scottish households are living in fuel poverty with many of these households living off the gas grid, dependent on electricity. The anticipated price rises will have a catastrophic effect on struggling households particularly as the job retention scheme ends and the Scottish winter approaches.

Scotland needs a fuel poverty strategy as a matter of urgency to ensure that we are prioritising the homes and families most in need. We must move quickly in order to protect our health service from the additional burden created by cold, damp homes and we must see adequate investment from Scottish Government that will eradicate the national shame that is fuel poverty.

Ben Saltmarsh, Chair of Fuel Poverty Coalition Cymru and Head of NEA Cymru, added:

Hundreds of thousands of households in Wales already struggle to keep warm at home. Far too many must ration essentials, cutting back on heating and electric. If these price rises come to bear, people will find it even harder still.

It is vital that the Welsh Government follows through with the promises that it made in its Fuel Poverty Plan to support the worst-affected first; upgrading the energy efficiency of fuel poor homes, maximising incomes, and working with partners, including the UK Government and Ofgem, to protect Welsh households.

[1] Wholesale prices on Zenergi show a rise of between 19% and 42% (from 2/6/21 to 30/6/21).

[2] Cornwall Insight data from energy analysts forecasts that the price cap on standard and default tariffs will rise in October to around £1,250/yr for a typical dual-fuel household paying by direct debit, up from the current price of £1,138/yr.

[3] End Fuel Poverty Coalition analysis of official Ofgem announcements.

[4] The calculation is based on EFRA Select Committee on Energy Efficiency and Fuel Poverty HC37 2009 and Fuel Poverty Methodology handbook BEIS / BRE, updated September 2016 which estimates that for every 1% rise in energy prices an additional 40,000 homes go into fuel poverty. The rise from 1138 to 1250 is a 9.8% rise so that equates to 392,000 (40,000 * 9.8).

Ofgem announces hike in fuel bills for millions

The End Fuel Poverty Coalition, a broad coalition of anti-poverty, environmental, health and housing campaigners, charities, local authorities, trade unions and consumer organisations, has criticised the decision to increase fuel bills for an estimated 11m people:

At the last count, 3.7 million households were already classified as living in fuel poverty and more than 2.1 million more were behind on their fuel bills.

Any price cap rise will only make matters worse for families struggling to make ends meet at the same time as bills are rocketing due to stay at home lockdown measures and the closure of schools.

While the price cap rises may seem small to officials, for ordinary people any increase will mean the choice between heating or eating becomes even starker.

If that wasn’t bad enough, fuel poverty can make respiratory illnesses worse – meaning conditions such as Covid may be exacerbated by living in cold damp homes.

Short-term energy saving measures and shopping around for cheaper energy can help reduce bills, but the scale of the problem faced by people this year is huge and any increases during the pandemic should be avoided.

We’d urge Ofgem and policy makers to think again about the price cap rise, or the Government to step in and provide emergency financial support to those who suffer due to the decision.

Support for households who are in fuel poverty is available from organisations such as Citizens Advice and can be found in our resources section.