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Red alert- Households face enormous pressures in build up to energy price cap rise

2 February 2022

Red alert- Households face enormous pressures in build up to energy price cap rise [ 1.5 mb]

Demand for our services is at its peak since the start of the pandemic.

As inflation hits the highest point in 30 years, household budgets are already facing enormous pressure. The worst is yet to come, with Ofgem expected to announce a more than 50% increase in the energy price cap from April, just as other price rises hit households.

In January 2022 more than 270,000 people sought advice from Citizens Advice, higher than at any point since the pandemic began.

In the same month, a staggering 24,000 people helped by the charity required some type of crisis support such as food bank vouchers and charitable support. This is the highest on record for the charity, passing the previous peak only set in December 2021.

The number of people supported with energy debts hit more than 8,000, the highest on record. And debts are rising too, with the average energy debt now standing at £1,450, up from £1,330 in 2020.

Immediate action is needed to help people through this crisis. The government should:

  • Provide targeted support to low income households in April 2022 via an ‘Energy Support Grant’ through the benefit system. Winter Fuel Payments are already paid to pensioners each year - an equivalent payment could be paid to all Universal Credit and legacy benefits claimants. This is the best way of reducing immediate financial pressure on households and simpler than creating a new Warm Home Discount-style rebate for spring.
  • Increase benefits by the Bank of England forecast inflation rate of 6% for April, rather than the planned September rate of 3.1%. This is a cost neutral solution which would help ensure benefit levels reflect the current cost of living.
  • Spread the cost of energy supplier failures over a longer period (at least 2-3 years) rather than current plans (recovering the majority in 2022/3).
  • Recognise the crisis will stretch through to next winter and temporarily extend the Warm Homes Discount. This means increasing the level of the rebate, expanding the number of eligible households and increasing provision for energy companies to provide extra financial assistance next winter.