Energy bills increasing again in October could leave more than 14 million people in Britain unable to afford them, suggests a new report from Citizens Advice.
Already five million people say they can’t afford the upcoming increase in the default tariff price cap in April – which will increase bills by £60 a month – the charity said. This could further increase by £145 a month for the winter price cap period, tripling the number of people unable to pay.
The increase will mean that one in four adults will be unable to afford their energy bills, while 41% of those set to go into the red from next month have said they are already having to borrow money to cover the cost of essentials.
Citizens Advice took into account support measures announced by the government within its report Crunch Point. In February, following the announcement that the price cap would increase by 54% for the summer period, rising to £1,971 from April, Chancellor Rishi Sunak unveiled three key measures to help support consumers. These include a one-off repayable £200 loan, a £150 council tax rebate and a discretionary fund.
However, the charities research found that more than eight in 10 (83%) people don’t think the £200 energy rebate – which will be paid to customers in October and then repaid by them over the course of five years – will make any significant difference to their ability to pay their bills.
Those on prepayment meters are being hit harder than others, Crunch Point suggests. The average family on a prepayment meter now faces bills of £336 a month – over £10 a day in December 2022. This is more than double the same usage a year previously, which would have cost them £147 in December 2021.
The third key point within the report is that demand for support is growing, with Citizens Advice saying it referred 24,197 people to crisis support in February, up from 23,989 in January. This is even before the new price cap kicks in, with numbers then expected to increase.
“These staggering findings must be a wake-up call to the government. With one in four unable to afford their bills come October, measures announced so far simply don’t meet the scale of the challenge,” said Dame Clare Moriarty, chief executive of Citizens Advice.
“The chancellor has a crucial opportunity to bring forward more support for those most in need in his Spring Statement next week. Increasing benefits in line with inflation, expanding the Warm Home Discount and announcing a more generous energy rebate should be top of his list.”
Increased volatility in the energy market driven by the Russian invasion of Ukraine has led to analysts and researchers predicting the price cap could surge over £3,000 in October.
Along with Citizens Advice, a number of charities and organisations are warning of the huge toll this increase could have on consumers, and calling on the government to act to protect the most vulnerable.
Earlier this month, the End Fuel Poverty Coalition suggested 8.5 million UK households face fuel poverty when the new price cap comes into force this winter for example, while the Resolution Foundation suggested that 6.3 million households could face fuel stress due to the summer cap increase alone.
Chancellor Sunak is unveiling his Spring Statement to the House of Commons on Wednesday 23 March.