UK households are facing a significant increase in their energy bills from April, following Ofgem's announcement that the energy price cap will rise by 54%. This hike means that the average annual energy bill for a typical household on a default tariff paying by direct debit is set to jump from £1,277 to £1,971 – an increase of £693. Prepayment meter customers will see an even larger increase, with their cap rising by £708 from £1,309 to £2,017.
Caroline Abrahams, Charity Director at Age UK, responded to the announcement by describing the situation as 'catastrophic' for many older people. She emphasised that many pensioners are already struggling to make ends meet, often living on fixed incomes that are not keeping pace with the rising cost of living. The charity warns that this substantial increase in energy costs will force many older individuals to choose between heating their homes and affording other essentials like food.
In response to the escalating energy costs, the Government has outlined a package of support measures. This includes a £200 energy bill rebate, which will be applied universally to household electricity bills from October, to be repaid over five years from April 2023. Additionally, a non-repayable £150 council tax rebate will be provided for households in council tax bands A-D. These measures aim to cushion the immediate impact of the price cap increase, though their long-term effectiveness in alleviating financial pressure remains a concern for many.
For households struggling to cope, organisations like Citizens Advice and MoneySavingExpert offer practical advice. Citizens Advice can help individuals check if they are eligible for benefits like Universal Credit or the Warm Home Discount, which provides a £150 discount on electricity bills for eligible low-income households. MoneySavingExpert also provides tips on reducing energy consumption, such as checking insulation, optimising boiler settings, and understanding smart meter usage. Exploring options for switching tariffs, although currently limited due to market conditions, is also a consideration for some.
The increase in the energy price cap is driven by a global surge in wholesale gas prices, which has significantly impacted energy suppliers. Ofgem reviews and adjusts the price cap twice a year, in April and October, to reflect these market fluctuations. While the government support package aims to provide some immediate relief, the ongoing volatility of energy markets suggests that households may continue to face significant financial pressures in the coming months and years.
Age UK continues to call for more substantial and targeted support for vulnerable older people, advocating for measures that go beyond one-off rebates to provide sustainable financial security against rising living costs. The charity highlights the importance of ensuring that no one is forced to live in a cold home due to affordability issues, particularly given the health risks associated with cold homes for older individuals.
Source: Ofgem, Age UK, HM Government