Households still face ‘horrific spending choices this winter’



The Prime Minister’s energy freeze plan was described as a “huge relief” for families and businesses, but charities warned that households still faced eyewatering bills. 

Citizens Advice Scotland Social Justice spokesperson Stephanie Millar said families would need to make “horrific spending choices this winter.”

The intervention, she added, would not end the crisis. 

On Thursday, Liz Truss unveiled a new package of measures which should see a typical household save on average £1,000 a year.

The two-year Energy Price Guarantee will limit the price suppliers can charge customers for units of gas and should mean most will pay no more than £2,500 a year on their energy bills, despite rising prices.

The government will fund the difference between what households pay and what energy suppliers would charge if the scheme was not in place.

It is due to come into force from 1st October and replaces the 80 per cent hike in the energy price cap, which would have seen bills reach £3,549 a year.

Forecasters had predicted that the cap could eventually breach £7,000 by next year. 

Ms Millar said that even with the government’s intervention, bills in October 2022 will be around £1,000 higher than a year ago.

She added: “One in three people already found those bills unaffordable. Meanwhile, half a million people in Scotland have no money left after covering the essentials.

“With inflation and interest rates remaining high people will really struggle, particularly those on low or insecure incomes.

“That’s why we need to see further action – including targeted support for the most vulnerable by boosting Universal Credit, and more support for advice services like CABs that help people through this crisis.”

That call was echoed by Imran Hussain, director of policy and campaigns at Action for Children, who urged the government to deliver “more targeted help through benefits for the low paid and those who have lost their jobs or cannot work because of disability, illness or caring responsibilities.”

He added: “Even with a freeze, energy bills will still be double what they were a year ago, the price of other essentials continues to soar and the true value of benefits has been cut.

Fiona King, Scotland Policy Manager at Save the Children, said the freeze would provide “some stability and will stop some families from falling into hardship”.

However, she warned many others would still reach “crisis point this winter.”

She added: “These are hardworking parents who won’t be able to afford to run a warm bath for their children and who’ll skip meals so their kids can eat.

“Capping energy prices at £2,500 is still a staggeringly high amount for low-income families. Many couldn’t afford to put the heating on last winter, let alone now with a cap over £1,000 higher than bills in 2021. 

“With the cost of food skyrocketing, and childcare bills also going up, families battling on low incomes have already hit an absolute limit.

“Capping energy prices does not acknowledge the additional costs families face.”

Ms Truss also announced support for businesses with a scheme initially lasting six months, with more ongoing help for particularly vulnerable firms.

National Chair of the Federation of Small Businesses Martin McTague said there were still major concerns.

He said: “It’s a huge relief for millions of small businesses to hear confirmation they will be part of the Government’s plans to help on energy. Many have been pushed to the brink by crippling energy bills, and so it is welcome that help is on the way. 

“The toxic combination of uncapped energy hikes, high taxes, inflation and negative growth have become an existential threat for many.”

He added: “Constricting the scale of energy bills for small businesses is unprecedented; we now have a high-level commitment in principle to help businesses get through the winter intact.

“Done right, this will be a lifeline – protecting jobs, communities and future economic recovery.

“However, the announcement is very high-level and sparse on detail so we will be working with the new Government to clarify what happens next. Small businesses’ instant reaction is that this is not enough information, yet, for them to plan.”


 





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