By Becky Morton, Business reporter, BBC News
The situation with energy bills is “a national crisis” on the scale of the Covid pandemic, Martin Lewis has said. The consumer expert told the BBC support needed to double to make up for the huge expected rise in bills.
The government said it had “continually taken action to help households”. It comes as a survey by comparison site Uswitch suggested many people are falling behind on energy payments with total debt owed three times higher than in September last year.
Almost a quarter of households owe £206 on average, according to the survey of 2,000 people. Uswitch advised people falling into debt to speak to their provider to work out a more affordable payment plan.
On Tuesday consultancy Cornwall Insight warned energy bills could rise much higher than previously thought in October.
Cornwall also expects bills to increase much more sharply in January, with the average household paying £355 a month, instead of the current £164 a month.
Mr Lewis said according to forecasts, the price cap – the maximum amount suppliers can charge customers in England, Scotland and Wales for each unit of energy – would effectively double between May of this year and October.
The latest price cap is due to be announced at the end of this month by the energy regulator Ofgem.
In May the government announced a package of support, including a £400 discount on energy bills for all UK households and an additional £650 for more than eight million low-income households.
But Mr Lewis told BBC Radio 4’s Today programme: “If [the chancellor] is going to be consistent, he will need to double every number in that package.”
Ministers are set to hold talks with energy giants on Thursday to discuss measures to ease the cost of living.
Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng will meet bosses to discuss rising prices and the sector’s profits.
However, Mr Lewis said ultimately it was “government alone” which could help by putting “more money into people’s pockets”.
The boss of Octopus Energy also said he thought the government needed to improve its offer of £400 for households to help with rising energy bills.
Greg Jackson told the BBC that while the initial package of support may have been “right” at the time, “clearly it’s not sufficient now and we need to look at a similarly significant assistance from the government for this winter”.
‘Only way to survive’
James Gilmour, who lives with his partner and three children in Essex, has taken out a £5,000 loan to help cover his energy bills when they go up in October.
His gas and electricity bill has already doubled from £145 per month to £320 a month and from October he said he will be paying more than £600 per month, according to the latest forecasts.
“As a family of five we simply cannot afford to pay this monthly as we are already getting half way into the month with no money left for food and essentials,” he told the BBC.
James, who works in the automotive industry, said the loan was “the only way to survive through this crisis”.
There are two main reasons households end up in debt to their supplier: the first reason, their direct debit payments may be set too low to cover the amount of energy being used.
Anyone who finds themselves in that position should contact their supplier as quickly as possible to avoid a sudden bill shock, and give it their correct meter readings.
The second reason is because people are just not keeping up with their payments.
The Uswitch survey revealed that in addition to the group in debt, eight million households have no credit balances, meaning they have no cushion against the bill rises this winter.
“This is an alarming situation, as summer is traditionally a time when households are using less power for heating, which helps bill payers to build up energy credit ahead of the winter,” said Justina Miltienyte, head of policy at Uswitch.com.
An Ofgem spokesperson said its “priority” is to “protect consumers” and make sure suppliers treat their customers in a “fair and reasonable manner”.
This included “proactively” making contact to identify if a customer is in payment difficulty, assessing repayments on a customer’s ability to pay and ensuring debt management activities are done in a “fair and reasonable way”, the spokesperson added.
A spokesperson from the Department for Business, Energy and Industrial Strategy said: “We know the pressures people are facing with rising costs, which is why we have continually taken action to help households by phasing in £37bn worth of support throughout the year.”
Separately on Wednesday, E.On reported first-half profits of just under €4.1bn (£3.5bn), which was about €700m below the previous year.
The company, which is one of the UK’s biggest energy suppliers, described the energy crisis as “extraordinary”, and said it highlighted the need for Europe “to transform its energy system. To be independent of Russian gas. To ensure supply security”.
It is worth saying again that the old advice to shop around to find a better energy deal just does not apply anymore. The default price cap, although super high, is the best rate available at the moment, so signing-up for a fixed deal isn’t a good idea.
If you are falling behind on your energy payments, or are unable to keep-up with the increases in direct debits being suggested by your supplier, then the first thing to do is let them know you’re struggling.
Making that call might be tough, as it’s never easy to admit you’re finding things difficult, however it’s likely to be the best protection for your household this winter.
Taking action is important because there is an extra layer of legal help available for people who are unable to pay, which forces suppliers to work through lots of different options with their customers. That includes agreeing a payment plan, giving temporary credit for prepayment customers, and arranging for payment directly through benefits.
Crucially, making that call to explain that you’re struggling means they can’t just cut you off.
Source: bbc.com
