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Energy Cap Announcement - How We Can Help.

To find out more information about the announcement, how this affects you and what we can do to help read below.

Energy bills are set to rise by 54% from April after the regulator Ofgem increased the price cap by £693 to £1,971. This announced increase will have an effect on approximately 22 million people who pay by direct debit.

Those on pre-payment meters, often the most vulnerable in our community, will have an even steeper increase of £708 and face an annual bill of £2,017 per year. This increase will apply from 1st April until 31st September.

In response to this rise, Chancellor Rishi Sunak has announced that the ‘vast majority’ will receive £350 to support the rising energy bills, which is just over half of the increase of those paying by Direct Debit and less for those on pre-payment meters. Those that are eligible will receive a £150 discount on their Council Tax Bill this April and then a further rebate of £200 in October off their energy bills. The latter amount will be repaid over 5 years, starting April 2023, in effect a Government loan.

In effect, this is yet another government loan for the poorest to manage on top of the Universal Credit Loan often imposed on new claimants waiting for their first benefit payment.

What is the Energy Cap and why has Ofgem announced this news today?

The Energy Price cap sets the maximum figure that can be charged for customers on a variable duel fuel rate for typical usage of gas and electricity for a six-month period. This record increase has been driven in large part by rising wholesale gas prices.

How does this affect our community?

This energy rise is contributing to the cost of living crisis and disproportionally affects those on low incomes. The Joseph Rowntree Foundation states:

‘Energy bills would amount to 6% of the average income of a middle-income family but 18% for a low-income family. This would rise to 25% for lone parents and couples without children, while single-adult households on low incomes could be forced to spend 54% of their income on gas and electricity.’

With an increase in prices in shops and now with this unprecedented rise in energy costs inflation will exceed 6% by this April, the highest inflation figure for almost 30 years. Coupled with the increase in National Insurance contributions for working families and rising interest rates millions more households will be pushed into fuel poverty for the first time. This coming April benefits are due to rise by only 3%.

Our debt advisor says, “Those within our community on the lowest incomes are already familiar with the appalling choice of to heat or eat with 2.5 million people being forced to use Foodbanks in the last year. This increase in fuel costs will only exacerbate the problem further forcing those families that have been just about managing to face the same stark choices.”

How we can help

Our free, confidential debt service is here to support anyone who is struggling to pay their energy bill or who find themselves in arrears. We can support an application to The Warm Home Discount Scheme for those in our community on low incomes, support in negotiating arrears repayments or making an application directly to your energy provider for financial support through trust fund applications.

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