Urgent plea as millions hit by energy bill shock | Personal Finance | Finance

Finance experts and charities have issued a plea to put money into the pockets of struggling households following news energy tariffs are to rise again.

The industry watchdog, Ofgem, has announced a change in the price cap that will put up the cost of each unit of gas and electricity used from January 1 just as the winter freeze takes hold.

The net effect is to push bills up by 1.2 percent, which equates to an annual rise of £21 for an average household per year and takes the annual bill to £1,738.

The increase will be particularly difficult for the more than nine million pensioners who have lost the annual Winter Fuel Payment, worth up to £300, to help with the cost of staying warm and keeping the lights on.

Caroline Abrahams Charity Director at Age UK said: “Older people, struggling without their Winter Fuel Payment, who were praying for a reduction in energy prices to help them in the New Year, will be bitterly disappointed today.

“The news that the energy price cap is instead slightly rising is the latest in a series of blows for pensioners living on a low or modest income, who do not receive Pension Credit because they don’t claim it or are not eligible.

“There are millions of older people in this situation and we know that many are hoping against hope that something will turn up to help ease their situation over the next few months, when the weather is at its coldest.

“If you are an older person for whom every penny counts, managing your energy bills until the rise in your State Pension starts coming through from April, just got harder.”

StepChange Debt Charity, the UK’s largest debt advice charity, said energy bills continue to be a heavy burden on household finances, particularly for people on lower incomes with many owing thousands of pounds to their supplier.

The average energy arrears of its clients stand at £2,516, which has leapt by 23 percent since the start of the year.

YouGov polling of UK adults from September found that more than one in four (27 percent) people in receipt of benefits have rationed the amount of heating, electricity or water they have used to keep up with credit repayments in the last three months.

Chief Client Officer at the charity, Richard Lane, said the increase in tariffs “is a blow to consumers who are already facing considerable cost of living pressures”.

Simon Francis, coordinator of the End Fuel Poverty warned: “As the temperatures plummet, a fourth winter of the energy bills crisis looms large in people’s minds.

“The decision to introduce a price cap change in the middle of winter was taken by Ofgem in 2022 and was described as an inhumane policy at the time. No wonder it has been opposed by campaigners ever since as households will have to find more money to keep themselves warm at the worst possible time.

“To make matters worse, the new Government has cut back the levels of support available to some of the most at risk households.”

He added: “While we welcome the Government’s long term plans to boost home energy efficiency to bring down bills and to improve energy security by stabilising prices, these reforms will take time to take effect and will be no comfort to those struggling this winter.

“That’s why it is so vital the ministers bring in more support for vulnerable households this winter and speed up plans to bring in a social tariff for next winter – a move that is backed by the vast majority of voters.”

Warm This Winter spokesperson Caroline Simpson said: “It’s freezing this week and now we have another price cap rise which is devastating to the 6.5 million in fuel poverty and all of us who will be paying 66 percent more on energy than we did before the start of the energy crisis.

“We desperately need to get on with the job of ramping up our supply of homegrown, renewable energy, which is abundantly available to us on this windy island and a properly funded programme of insulation and ventilation to upgrade our leaky homes.

“Homegrown renewables are the only way we will cut our bills for good but whilst that kicks in we also need commitment from the government that vulnerable households will be supported with their energy bills this winter and next with a social tariff funded by the energy sector’s vast profits. In this day and age, nobody should be afraid to turn on the heating because they can’t afford to pay for it.”

Ben Perks, Managing Director at Orchard Financial Advisers, said: “The battle between households and their bills rages on. Disposable income is fast becoming a thing of the past.

“Families are cash strapped and another uncontrollable increase will leave many with their head in their hands wondering, “when are we going to catch a break?” Something needs to change and urgent action is needed from this Government to get control of the economy and put more money in people’s pockets.”

Ranald Mitchell, Director at Charwin Mortgages, told Newspage: “Even a small rise like this is another turn of the screw for households already grappling with high costs.

“It’s a stark reminder that energy affordability remains a critical issue, and we need urgent progress on long-term solutions like renewable energy to shield families from this relentless financial strain. The pressure on people’s finances is growing all the time.”

Riz Malik, Independent Financial Adviser at R3 Wealth, said: “The rise in the energy price cap is another financial strain for households across the country. It comes as mortgage rates and rents also rise.

“Only a month ago many of us believed that things were going to get better, but now they look set to get worse. When will the government understand that higher bills means less discretionary spending, which in turn hits the economy’s growth prospects?

“The question remains, why are our energy costs substantially greater than those of many other countries?”