Kevin PeacheyCost of living correspondent
A rise in gas and electricity prices has prompted energy suppliers to call for “enduring” targeted support for those in financial difficulty.
Energy costs are up 2% from Wednesday for millions of people in England, Wales and Scotland as regulator Ofgem’s latest price cap come into effect.
Campaigners say many will struggle with another winter of relatively high bills, with a record £4.4bn owed to suppliers by their customers, recent official figures reveal.
The government said it was taking “urgent action” to support vulnerable families this winter.
Some companies have schemes in place to write off debt or offer emergency vouchers, but these measures vary across the sector.
“The level of support [is] still insufficient for those that need it most,” said Ned Hammond, a deputy director at Energy UK.
“The government needs to make swift progress to improve targeting and design an enduring support scheme that effectively addresses fuel poverty.”
Ministers point to the extension of the Warm Home Discount to those on benefits, which knocks £150 off winter bills for one in five households. It is funded by a rise for all billpayers.
“In the coming weeks, we will be announcing details of the biggest home upgrade programme in British history to improve up to five million homes, making them cheaper and cleaner to run,” said energy minister Martin McCluskey.
The government has also pledged to bring down household energy costs by investing in home-grown energy.
An immediate issue for households is the 2% increase that has now taken effect for millions of people in England, Scotland and Wales who are on variable tariffs. Those who have fixed deals will not be affected. The regulator and suppliers say people should investigate whether a fixed tariff saves them money and fits their circumstances.
Ofgem’s cap sets the maximum price that can be charged for each unit of gas and electricity. The increase for October to the end of December means a household using a typical amount of energy will pay £1,755 a year, up £35 a year.
Individual households can calculate their estimated specific change by adding £2 onto every £100 they spent on energy each year.
Higher bills are the result of extra financial support through the Warm Home Discount, and costs involved in matching the supply of energy with demand, which includes switching generators such as windfarms on and off.
Households can try their best to further safely manage their energy use during a colder and darker time of year, although that has been the norm for millions over recent years.
Energy UK said more work was needed to identify the exact households that were most in need.
Support should use income, health and energy consumption data and be tiered to give greater support to those most in need. It should be funded by taxation, it said.
A report by the trade body suggested that spending £1.5bn a year could “close the fuel poverty gap completely” and save households in fuel poverty an average of £400 a year.
Ofgem’s most recent data, which covers the period from April to June, shows that more than one million households have no arrangement to repay the debt to their suppliers, a record high.
Ofgem wants to establish a fund called the Debt Relief Support Scheme, which suppliers could use to write off debt that is so significant it will never be paid back or help pay off what is owed by “debt matching” customer payments. Any such scheme would likely have to be funded through everyone’s bills or by the government.
As part of the plans, the regulator said it wanted to ensure an easy and consistent service for households to get help from charities and debt support agencies, so that debts owed to energy companies remain manageable.
Support for pensioners through the winter fuel payment was initially slashed by the government, a move that led to a significant u-turn.
Nine million pensioners in England and Wales with an annual income of £35,000 or less will now be eligible and can expect their payment in the coming weeks.
