Fuel poverty charity comments on ‘devastating’ increase to energy price cap

National Energy Action (NEA) Press Release

For immediate release – 6^th August 2021

Contact: Peter Smith, Director of Policy and Advocacy (peter.smith@nea.org.uk) Mobile: 07866720476

• Today the GB energy regulator, Ofgem, has announced the biggest ever increase to the energy price cap.
• The increase of £153 for prepayment customers and £139 for those paying by direct debit is likely to result in suppliers putting their prices up in October – when millions of people will see a reduction in their incomes, as furlough winds down and the uplifts to Universal Credit are likely to be withdrawn.
• Charity warns a ‘toxic’ combination of higher prices, reduced incomes and leaky, inefficient housing will lead to a surge in utility debt and badly damage physical and mental health this winter.
• They call on Ofgem and the UK Government to do more to protect the most vulnerable consumers this winter.

Peter Smith, Director of Policy and Advocacy at fuel poverty charity National Energy Action (NEA) comments:

“This is a devastating increase [to the cap]. Millions of household budgets are already stretched to the limit and this massive increase could not be coming at a worse time. As well as a significant rise in general inflation – driving up spending on other essentials such as food – the new cap level takes effect in October when millions of people will see a reduction in their incomes, as furlough winds down and the uplifts to Universal Credit are likely to be withdrawn. This toxic combination of higher prices, reduced incomes and leaky, inefficient housing, will lead to a further surge in utility debt and badly damage physical and mental health this winter.

“There is far more Ofgem and the UK Government can do to help to protect the most vulnerable consumers this winter. For years Ofgem and [the UK] Government have insisted the way to avoid increases to bills is to switch. Many fixed deals have however come to an end and for some customers switching is impossible due to levels of debt or because pre-pay customers have far fewer options to switch supplier or tariff. There may be limited scope to mute the impact of soaring wholesale prices within the cap, but Ofgem can and must provide deeper protection for the most vulnerable customers. The UK Government can also directly help reduce energy arrears as well as maintaining investment to reduce needless energy waste in our homes”. 

ENDS

Notes to editors

1. NEA works across England, Wales and Northern Ireland to ensure that everyone in the UK can afford to live in a warm, dry home. For more information visit https://www.nea.org.uk/.
2. Today’s announcement by Ofgem can be found here: https://www.ofgem.gov.uk/publications/record-gas-prices-drive-price-cap-ps139-customers-encouraged-contact-supplier-support-and-switch-better-deal-if-possible?utm_source=Twitter&utm_medium=Energy_price_cap_announcement&utm_term=&utm_content=Energy_price_cap_announcement_PR&utm_campaign=Energy_price_cap_announcement
3. According to End Fuel Poverty Coalition estimates, over 4 million people are already estimated to be behind on their household bills and a 13% rise in the price cap would result in an additional 524,000 households in fuel poverty.
4. Last winter Public Health England (PHE) warned there is a damaging overlap between the health impacts of living in a cold home and Covid-19. Pre-existing chronic medical conditions such as cardiovascular and respiratory conditions, such as chronic obstructive pulmonary disease (COPD), asthma and heart disease are particularly badly affected by a cold home. See: https://www.gov.uk/government/publications/health-matters-cold-weather-and-covid-19/health-matters-cold-weather-and-covid-19.
5. Whilst Ofgem have limited scope to keep the Default Tariff cap lower given the current primary legislation within the Domestic Gas and Electricity (Tariff Cap) Act 2018, NEA has contested they have the powers to provide much deeper protection for the most vulnerable customers.
6. NEA has produced a short briefing highlighting what steps Ofgem and the UK Government could take to reduce the impact of the price cap, see: https://www.nea.org.uk/wp-content/uploads/2021/08/Supporting-vulnerable-consumers-this-winter.pdf#