Simon Read: Energy hikes turn up financial heat on struggling millions
Saturday 17 September 2011
Soaring energy prices could be catastrophic for people facing fuel poverty. The latest hikes mean seven million people now face energy bills which add up to a tenth of their income. On Thursday, EDF became the last of the big six suppliers to hike prices, announcing gas increases of 15.4 per cent and electricity rises of 4.5 per cent from 10 November.
The move means the average prike hike across the main suppliers this autumn is 14.2 per cent. That puts £161 on to the average energy bill, just when the cold weather hits and we all start ramping up our heating. It's also worth remembering that the same companies ramped up prices at the turn of the year, when home energy costs then climbed 5.9 per cent or added £63 to the average bill.
Putting the two together means we've seen energy bills climb from from an average £1,069 to £1,293 within a year. That's a 21 per cent – or £224 – increase in energy prices. That's been enough to tip 840,000 more households into fuel poverty according to uSwitch, on top of the estimated six million or so who have already been struggling to pay their bills.
An alarming report from debt charity Consumer Credit Counselling Service earlier this week revealed that almost a third of people contacting it are already in fuel poverty. Around 20,000 people contacted the charity with payment problems in the first six months of the year, it said.
Their average combined gas and electricity bill was £136 a month, a significant chunk of their average monthly income of £847. The burden of energy bills left these folk £302 short of the amount they need to cover basic living expenses each month. That also leaves them some way from being able to start to repay debts totalling, on average, £15,759.
Older people struggling with rising fuel prices are often forced into a stark choice, to either heat or eat. The net result is often illness and in some cases, needless deaths, which is clearly an unacceptable situation.
The latest figures from the Department of Energy & Climate Change published in July put the projected fuel poverty figures at slightly lower, but they are still at their highest levels since 1997.
The Government has recognised the seriousness of the problem and last year announced an independent review to take a fresh look at fuel poverty, led by Professor John Hill. He's charged with finding ways to tackle the problems underlying fuel poverty.
The review is set to publish its interim findings next month with the final report due in early 2012. Reviews are all very well but, if uSwitch's figures are believed, there are seven million people who need help now. What's the solution? It's possible that there are households that can cut fuel costs through energy efficiency measures. The Energy Saving Trust, for instance, has plenty of tips on its website at www.energysavingtrust.org.uk or through a free helpline on 0800 512012.
There are also a range of grants available to help hard-pressed families with home improvements that would make their property more energy efficient. Details of all can be found at the Energy Saving Trust's website, where you simply need to put in your post code to find out what grants are available in your area.
But the Government needs to consider stronger controls on energy companies to ensure their price rises don't force more people into making stark decisions that could prove fatal. Professor Hill has a huge responsibility when he makes his interim report next month – I hope he rises to it.
Ryanair stuck two fingers up to the Office of Fair Trading this week by launching its own pre-payment card. Anyone taking out the card and using it to buy flights through the airline will not need to pay the airline's standard £6 plastic card surcharge for each flight booked. The move will allow the budget airline to claim that customers don't need to pay the outrageous fee.
But it goes against OFT demands that airlines drop surcharges on debit and credit card payments which add up to £48 to the cost of a family of four flying to somewhere like Dublin. Back in July, I predicted that it would be a long time before we would see the end of the profitable practice and Ryanair's actions this week have sadly proved me right.
Travellers tempted to apply for Ryanair's new card will soon discover even more charges. There's a steep £4 fee for withdrawing cash over the counter at a bank and a £2 charge for using the card at an ATM. There'll be a 50p charge for all transactions from 1 April 2012 and there's a rolling fee of £2.50 if a card is not used for six months. In short Ryanair has discovered another cash-cow to boost profits. The OFT should get tough with the airline.
Time to switch off!
Hitting your TV screens tomorrow will be a new Halifax advert featuring staff performing as a community choir. Will it be as dreadful as their last set of "Isa, Isa, baby" ads? It will, judging by the promise of "a revitalised, challenger brand identity" which seems to make no sense!
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