Poverty organizations are calling for urgent government action on energy bills after analysts predicted average annual bills would top £3,600 this winter
Poverty organizations have warned people are already resorting to “desperate methods” to save money on energy bills amid fears many will plunge into crisis this winter.
Charities have called for urgent government action after analysts at Cornwall Insight made a dire prediction that bills will reach a staggering £3,359 a year for the average household from October and won’t fall below that level until at least the end of next year.
The analysis came on the same day that energy giant BP reported its biggest quarterly profit in 14 years.
Peter Smith, director of policy and advocacy at National Energy Action, said the charity was preparing for a “hell of a winter”.
He said: “Energy prices are already at record levels, so it is extremely worrying that the bills will exceed previous expectations.”
National Energy Action last month predicted that 8.2 million British households will face energy poverty if the average bill hits £3,250 a year.
This corresponds to 1 in 3 households.
Mr Smith said the charity has already seen households adopting “a range of desperate methods” to reduce energy use in their homes.
These include avoiding heating homes altogether, going to bed early, spending time in libraries or cafes to take advantage of free electricity and heating, reducing grocery stores, and eating only cold meals.
He explained: “These are typically things we see in more vulnerable households during the winter months and they are relatively rare.
“But at the rate at which prices are increasing, we fear that these will become mainstream prices for more and more people.”
Asked about the earnings of energy companies like BP, Mr Smith commented: “The public will be angry, frustrated and alarmed.
“While it is hugely important that oil and gas companies acknowledge the legitimate concerns about profit margins given the cost of living crisis the rest of the country is facing, our concern is that they will not do anything about it until the UK Government asks You to.”
What are other charities saying?
Sara Willcocks, head of external affairs at national charity Turn2Us, also urged the government to act.
She commented: “There is an urgent need for action to catch people before they fall into a crisis in the coming months.
“[The Government] should at least ensure that benefit levels are increased to cover actual living expenses with dignity and that they suspend the practice of benefit deductions so that money is not taken away from people when they need it most.”
Ms Willcocks added that the charity hears from struggling families on a daily basis and described their stories as “heartbreaking”.
She said: “For one of the richest economies in the world, that’s not right.
“It’s time we asked ourselves, how many of us will have to make the devastating choice this winter of supporting our families or sitting out in the cold?”
Organizations joining the fight against fuel poverty include Fuel Poverty Action, which recently launched a campaign called #EnergyForAll, which would give households a free amount of energy to meet basic needs like heating, cooking and lighting.
The organization said the new pricing system would be paid for by imposing a windfall tax on oil and gas company profits and ending fossil fuel subsidies.
Ruth London, a representative for Fuel Poverty Action, said: “Energy bills are reaching levels that are simply unaffordable.
“Energy companies and their CEOs and shareholders are getting fat on the money from our bills and meters while children starve and retirees die from the cold.
“The Government handouts are putting band-aids on the car accident injuries suffered by the British people.
“It can not go on like this.”
407,000 people have signed the petition and Ms London added that she hopes the directive, if implemented, will incentivize a switch to cleaner, cheaper and renewable energy.
What is likely to happen to the energy bills?
Household energy bills are expected to be more than two and a half times their pre-crisis levels by at least 2024, one of the country’s most respected energy consultancies has warned.
Cornwall Insight has forecast the price cap on energy bills, which regulates what 24 million households in England, Wales and Scotland pay, will rise to £3,615 from January – and reach £3,729 in April.
This is hundreds of pounds more than previous forecasts have warned.
Experts say bills will start falling in the summer of 2023 – but only slowly, falling to £3,569 by July and £3,470 for October, November and December 2023.
The analysis came on the same day that energy giant BP reported its biggest quarterly profit in 14 years, prompting a strong backlash from the public, charities and activists.
The oil and gas company posted underlying profit of £6.9 billion between April and June, more than triple the amount it made in the same period last year.
Shell, Equinor, TotalEnergies and British Gas owner Centrica are other examples of companies benefiting from higher gas and oil prices, as all of these companies have also recently announced earnings.
In May the government announced a support package for energy bills in response to forecasts that bills for the average household would rise to £2,800 by October.
It has not yet been announced whether this package will change according to more recent predictions.
Craig Lowrey, Principal Adviser at Cornwall Insight said: “While the Government has pledged some support for the October energy hike, our ceiling forecast has risen by over £500 since the funding was proposed.
“The truth is that the £400 pledge will only scratch the surface of this problem.”
Richard Neudegg, director of regulation at Uswitch, echoed those thoughts, calling for the Calthe to be increased from £400 to at least £600 and payments to vulnerable households to be increased from £650 to £950.
He explained: “The government did the right thing by stepping in with wide-ranging support to try and ease the blow.
“However, this support now looks like a gross underestimate of what consumers need.
“Households need clarity in order to be able to plan for the most expensive winter in living memory.”
Why are energy costs rising?
Households are facing a sharp increase in their energy prices due to supply and demand in the global wholesale market triggered by the war in Ukraine.
Russia has cut supplies to Europe following its invasion, and fears are growing that the country could turn off the taps altogether.
This has pushed up gas and electricity providers’ costs – and these costs are now being passed on to consumers.
Where can I get help?
You can learn about the grants and benefits available to you when paying your energy bills on Citizens Advice’s website.
You can see if your energy company provides charitable grants on Turn2Us website.