The prospect of higher energy bills has prompted a deluge of calls to charities, with Citizens Advice warning of a “very difficult winter” for households on low incomes.
Seven small energy firms have failed in recent weeks because of record energy market prices, forcing their customers on to more expensive deals with a new supplier.
Dame Clare Moriarty, the chief executive of Citizens Advice, said the prospect of higher bills had come on top of dealing with the fallout from the end of the government’s job subsidy scheme as well as the £20 a week cut to universal credit.
The charity was seeing a big increase in people seeking information and advice on energy suppliers but also seeking help coping with the wider cost of living squeeze.
“We are seeing people come to us because, more broadly, they’re just seeing family finances being really, really squeezed,” she said. “We know that this is going to be a very difficult winter for many people on low incomes.”
A further 800,000 households fell victim to the turmoil in the energy market on Wednesday as both Avro and Green Energy went bust. Seven energy suppliers have now gone under, with a total of more than 1.5m households being shunted on to a new supplier.
National Energy Action (NEA), the fuel poverty charity, said it was receiving more calls than usual for this time of year as the winter months were usually a more precarious period. It is particularly concerned about the impact of the energy crisis on the 1m-2m households across Great Britain that are reliant on legacy pre-payment meters.
Peter Smith, the NEA director of policy and advocacy, said there was a high correlation between people living in fuel poverty, a term that refers to a low-income household that cannot afford to heat and power their home, and the use of pre-payment meters.
The NEA is concerned that this group will not be able to top up with a new supplier if their energy provider fails, as the device may have to be changed. “We are desperately worried that unless we find a solution to this issue people could have their gas or electricity cut off this winter,” said Smith.
The crisis has hit just as the government’s furlough scheme, which is still supporting 1.6 million workers, is being withdrawn. The scheme, as well as other emergency measures such as the ban on housing evictions and mortgage holidays, meant the “crunch point”, when households had to face their financial problems, had been postponed until now, according to the debt advice charity StepChange.
The charity’s head, Sue Anderson, said it was anticipating greater demand for its services as households had accumulated “serious levels” of unpaid bills and debts.
“This has already been a tale of two pandemics, with some households becoming better off and able to save, while others have seen their income reduced and their costs increased,” she said. “Higher energy costs and lower levels of support will exacerbate the impact for those households who already have less financial resilience and more accumulated debt as a result of the pandemic.”
Moriarty said the people whose energy supplier has collapsed should “stay calm”. They would not lose their gas and electricity connection and would be transferred by Ofgem to a new supplier.
However, they could have to pay more for heat and light, making it a “very, very worrying time” for people, she told BBC Radio 4’s Today programme.
“They won’t be transferred, necessarily, on the tariff they were on previously,” she said. “So if people were on particular deals they will tend to transfer on to the standard tariff of the new supplier. So that may mean that people’s bills will go up.”