As the temperature drops and winter approaches, the issue of energy bills has become a hot topic in the UK. The Secretary of State for Energy Security and Net Zero, Grant Shapps, has shed some light on the government’s stance on this issue. The crux of the matter is that the UK government does not foresee providing financial support for rising energy bills in the forthcoming winter season.
Government’s Standpoint on Energy Bills
According to Grant Shapps, the government is not in favour of "constantly paying energy bills". Instead, the focus lies on reducing taxes as inflation falls. The government aims to strike a balance between helping citizens with their energy bills and maintaining a stable economy.
The Energy Price Guarantee
The UK Government introduced an energy price guarantee last year, which limited the amount a typical household could be charged per unit of gas or electricity. The cap was set at an annual equivalent of around £2,500. This measure was in effect until June 2023. From July 2023 to March 2024, the cap will rise to £3,000, to offset any potential increase in energy prices.
The Role of Ofgem
Ofgem, the UK’s gas and electricity authority, has a price cap in place till September. The cap is set at £2,074, which is lower than the energy price guarantee. This has resulted in customers with standard variable tariffs seeing a reduction in their bills.
Support Schemes and Their Impact
There was a separate support scheme that provided around £400 per household from October last year. However, this scheme came to an end last month. Despite the end of this scheme, energy bills are expected to remain "relatively stable", albeit significantly higher than pre-pandemic levels.
The Future of the UK Economy
Shapps has emphasised the need for a lower-taxed economy. He stated that this was the vision that Prime Minister Rishi Sunak stood for during his election campaign. Sunak, however, also acknowledged that achieving a lower-taxed economy would not be an overnight process.
The Bank of England’s Stance
The Bank of England has warned that the UK faces a prolonged period of high interest rates and low growth. The Bank raised interest rates for the 14th consecutive time, moving from 5 per cent to 5.25 per cent. This move was to ensure inflation remained under control.
The Role of the Financial Conduct Authority
The Financial Conduct Authority (FCA) has stated that it will take action against banks and building societies offering low savings rates. These financial institutions will need to justify the fairness of their rates by the end of August. The FCA’s decision follows a review of the cash savings market and meetings with banks. The regulator found that while interest rates on savings accounts have been rising, the increase has been slower for easy access accounts.
The Impact on the Savings Market
The FCA’s review revealed that the nine largest savings providers passed on only 28 per cent of the base rate rise to their easy access deposit accounts between January 2022 and May 2023. However, notice and fixed-term savings accounts have seen a greater increase, with the same firms passing on 51 per cent of the rate rise during the same period.
UK government energy grants for households in 2023
The UK government has announced plans to introduce energy grants for households in 2023. The grants are intended to help those on low incomes with their energy bills. The scheme will mean that eligible households will receive up to £150 per year towards their energy bills, which is expected to benefit around four million households. This is in addition to the fuel poverty scheme, which provides assistance with energy efficiency measures such as insulation and double glazing.
The government has also announced plans to introduce a new green home grant scheme, which will provide households with up to £10,000 towards making their homes more energy efficient. This is intended to help reduce carbon emissions and create jobs in construction and other related industries. The government has stated that it hopes these measures will ensure that all homes are more efficient by 2035.
In addition, the government is encouraging people to switch suppliers in order to get the best deal on their energy bills. It has launched a new price comparison website which allows customers
I’m unable to cover the costs of my energy bills, what can I do in this situation?
If you are struggling to cover the costs of your energy bills, there are a number of options available to you. Firstly, you can contact your energy supplier and explain your situation. Many suppliers have hardship funds which they can use to provide financial assistance in emergency situations. You may also be eligible for government schemes such as the Warm Home Discount, which provides a one-off discount on electricity bills for households on low incomes.
You could also consider switching suppliers to get a better deal on your energy bills. The government’s price comparison website is a great tool for finding the best deals from different suppliers. Additionally, you may want to consider using renewable energy sources such as solar panels or wind turbines if this is an option in your area. These sources of energy can help reduce your energy bills in the long run. Finally, it is important to remember that no one should suffer from fuel poverty and there are organisations who can provide advice and support if you need it.
Who is eligible for Warm Home discounts?
The Warm Home Discount is a government scheme which provides a one-off discount on electricity bills for households on low incomes. Eligibility for this scheme is based on the customer’s income and whether they receive certain benefits. Generally, pensioners who receive the Guarantee Credit element of Pension Credit are eligible, as are certain other customers who receive either Working Tax Credits, Universal Credit or income-related Employment Support Allowance. Customers must also have a pre-payment meter installed in their homes in order to be eligible for the discount. Additionally, some energy suppliers may provide discounts to customers who do not meet the criteria set out by the government. It is therefore worth checking with your energy supplier to see if you are eligible.
In conclusion, while the UK government acknowledges the potential difficulties faced by households due to rising energy bills, it currently does not plan to provide any additional financial support. The focus remains on reducing taxes once inflation falls. The government, financial authorities, and consumers will need to navigate the complex landscape of energy bills in the UK, particularly as the colder months approach.
Compare and see how much you can save on your energy bills