Sometimes, the momentous impact of a single event can utterly transform things in the space of a few hours. Over the last few weeks, the big news has been the announcement of the Governments plans for tackling the high cost of energy bills.
Meanwhile, the UK also began an extended period of mourning and reflection, due to Her Majesty the Queen’s passing.
Yet the cost-of-living crisis continues to have a major impact on millions of people and many are deeply concerned about the energy crisis. There have been lots of varied stories about the energy proposals in the news, so it’s hard to keep on top of what precisely is going on.
Here is Resolver’s update on where we are right now – and the things not covered by the Government’s plans.
The Government’s scheme is called the ‘Energy Price Guarantee’ and applies to England, Scotland and Wales, with a reassurance that Northern Ireland will be provided with as similar a deal as possible when the details have been agreed upon. The guarantee will last for two years.
This means the average household will have their bills capped at £2,500 a year – not £3,549 as was announced by Ofgem in August. That’s still a nearly 30% increase on the last price increase (£1,971) – and crucially that’s still too high for many people to afford.
If you have a ‘pre-payment’ (key) meter then the price cap will also apply. However, it looks like this way of paying will still be more expensive. We are still awaiting news about this discount and will keep you all informed.
The standing charge – which has come under much scrutiny lately as you have to pay it even if you’re not using energy – will be 46p per day for electricity and 28p per day for gas.
At long last, businesses will also receive help, though it has since emerged that this may not arrive until November (though it will be backdated). That’s because the Government is still working out how this form of support will be given in practice. It’s only temporary relief though as the scheme is proposed to last just six months, putting many small and medium businesses at risk of not surviving.
In addition, millions of people who weren’t covered by previous schemes and grants will receive ‘equivalent’ help. This includes people who use heating oil, those who live in community-style housing like caravan parks, people living in buildings where they collectively pay for energy and those whose landlord pays the energy bill.
As with the other energy price cap announcements, the ‘average’ examples are not what you’ll actually pay. This will vary depending on what you use. MoneySavingExpert has a great calculator on their website, though you’ll need your annual or monthly energy consumption (check your last bill): https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/#tool
Resolver recently wrote about the risks of fixing an energy bill deal. Sadly, the details around what will happen to people who were panicked or pressured into signing up for one of these deals are currently unclear. Energy firms will be contacting people on fixed deals over the coming days with proposals.
While the Government has said that reductions will be offered to those who are fixed on an expensive deal, it’s possible that some people will still be locked into a more expensive deal.
Remember, you can cancel if it’s within 14 days of when you signed the new contract. If you feel you were misled, you can also make a complaint.
The big political question is, who pays for all of this? The cost of the scheme is estimated at £130 to £150 billion. The Government has said that this will come from increased borrowing (like selling bonds to investors). However, these bonds have had to be paid back with interest when they mature. This means the taxpayer pays the bill ultimately. Many have expressed disappointment that the Government hasn’t taken the opportunity to impose another windfall tax – or even renationalise parts of the industry.
The support for businesses is disappointing. Though some businesses have been classified as ‘vulnerable’ it’s not clear how this will be defined. Many businesses are, by their nature, larger consumers of energy. There’s little that they can do about this if their products or services depend on energy. It’s vital that businesses are helped to survive to support our wider economy – shop local if you can and keep them in business.
All the previous grants and support announced for people struggling financially are still going ahead. We will all receive the £400 Energy Bills Support Scheme, which will be paid out in six monthly payments from October.
You can find out more about the scheme and how you will get the money here: https://www.gov.uk/government/news/400-energy-bills-discount-to-support-households-this-winter
Outside of the Government schemes, energy businesses offer energy or heating grants for their customers. While most of these offers are for their own customers who meet certain criteria, others, like the scheme run by British Gas, are open to everyone.
Citizens Advice has a useful list of all of the main schemes here: https://www.citizensadvice.org.uk/consumer/energy/energy-supply/get-help-paying-your-bills/grants-and-benefits-to-help-you-pay-your-energy-bills/#Grants_To_Help_Pay_Energy_Debts
As we have mentioned in our previous newsletters and guides, if you can’t afford your bills now, tell the firm you are in financial difficulties and they should come up with a tailored plan to suit your needs. You can find a full list of the support that the regulator Ofgem says you can expect here: https://www.ofgem.gov.uk/getting-help-if-you-cant-afford-your-energy-bills
If you have any issues, we can help you make a complaint for free about anything energy related, from incorrect billing to switching errors. Just get in touch and we’ll be happy to help.