Energy bills will still be a struggle despite new cap
The announcement of the death of the Queen has transformed the UK and the period of national mourning dominates the news. Yet the cost-ofliving crisis continues and many people are deeply concerned about the energy crisis.
So here’s an update on where we are right now – and what to watch out for.
WHAT THE GOVERNMENT ANNOUNCED
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. The guarantee will last for two years.
This means the average household will have bills capped at £2,500 a year – not the jaw-dropping £3,549 announced by Ofgem in August. That’s still a nearly 30% increase on the last price hike (£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, to my immense disappointment, it looks like this way of paying will still be more expensive – which needs to change.
At long last, businesses will also receive help, though it has since emerged this may not arrive until November (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, threatening many small and medium businesses with closure.
In addition, I’m assured that the millions of people who weren’t covered by previous schemes and grants will receive ‘equivalent’ help. This includes people who use heating oil, 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.
WHAT DO I NEED TO KNOW – AND WHAT ARE THE CATCHES?
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 its website, though you’ll need your annual or monthly energy consumption (check your last bill): moneysavingexpert. com/utilities/what-are-the-price-capunit-rates-/#tool.
The big political question is, who pays for all of this? The cost of the scheme is estimated at £130 to £150billion. The Government has said that this will come from increased borrowing (like selling bonds to investors). However, for hundreds of years, these bonds have had to be paid back with interest when they mature. This means the taxpayer pays the bill ultimately. Many are disappointed that the Government hasn’t taken the opportunity to impose another windfall tax – or even re-nationalise parts of the industry.
Support for businesses is disappointing. Though some have been classified as ‘vulnerable’ (like pubs) it’s not clear how this will be defined. It’s vital that businesses are helped to survive to support our wider economy – shop local if you can and keep them in business.
WHAT SUPPORT IS AVAILABLE?
All the previous grants and support announced for people struggling financially are going ahead. We will all receive the £400 energy grant in six instalments from October.
As I’ve mentioned in previous columns, if you can’t afford bills now, tell the firm you are in financial difficulties and they should come up with a tailored plan.
You can find a full list of all the energy grants, help and support you can expect at: ofgem.gov.uk/gettinghelp-if-you-cant-afford-your-energybills.