National Energy Action (NEA) said on 3 February 2022 that the UK Government's measures to address rising energy bills are "woefully inadequate" and will not avert harm to the poorest households. The charity, which works across England, Wales and Northern Ireland, was responding to Ofgem's confirmation of higher average bills and to the Government's announced rebate scheme1.
Ofgem confirmed that average energy bills for Direct Debit and Standard Credit customers across Britain could soon reach up to £1,971, an increase of over 54 per cent compared with bills at the time. For the more than 4.5 million customers on prepayment meters, the rises are higher still, up to £2,017, an increase of over £708, despite many of these customers already being in severe debt1.
The UK Government announced a "rebate and clawback" scheme, with energy suppliers provided with loans to fund rebates of £200 to each household, which NEA says will need to be paid back in years to come. Some additional support through Council Tax rebates has also been pledged1.
NEA said the gap between the October 2021 and April 2022 increases and the new measures leaves people on prepayment meters over £500 per year worse off. It added that the cost of heating an average home will have doubled in 18 months, and that the number of households in fuel poverty across the UK will rise from 4 million to 6.5 million in the six months from October 2021 to April 20221.
"These energy crisis measures are woefully inadequate and will leave those on the lowest incomes and in the least efficient homes in deep peril."
Scorer said the rebates on bills and Council Tax are "not sufficiently targeted, too small and too complex", and that the Government would have no choice but to return to the issue later in the year1.
NEA also estimated that the October 2021 price cap increase generated HM Treasury an additional £100 million per year in VAT on domestic electricity and gas bills, and that Ofgem's announcement pushes the VAT windfall up further, increasing yields by in excess of £700 million per year. It said carbon revenue has also grown during the gas crisis, netting the Treasury a further £1 billion until the end of April, on top of the £3 billion already due for the year1.
| Measure | Detail as reported |
|---|---|
| Average bill, Direct Debit and Standard Credit | Up to £1,971, over 54% higher1 |
| Average bill, prepayment meters | Up to £2,017, over £708 higher1 |
| Households on prepayment meters | Over 4.5 million1 |
| Fuel poverty households, October 2021 to April 2022 | 4 million rising to 6.5 million1 |
| Government rebate | £200 per household, funded by supplier loans to be repaid1 |
Why it matters for households
The figures set out by NEA describe the scale of the gap between rising bills and the support announced. For a household on a prepayment meter, the £200 rebate does not cover the increase NEA identifies, leaving a shortfall of more than £500 a year once the October 2021 and April 2022 rises are counted1. Prepayment customers are also the group facing the largest cash increase, despite many already carrying debt1.
For a home's energy independence, the practical effect is that more of the household budget is committed to standing and unit charges before any energy is used, and the support on offer is spread across all households rather than concentrated on those least able to pay. NEA's assessment is that the measures are broad rather than targeted, which it says limits their effect on the poorest homes1. The charity's own proposals for targeted relief, funded from the Treasury windfall it identifies, are set out in its briefing but have not been adopted1.
What happens next
NEA expects the Government will have to return to the issue of fuel poverty and a further price rise later in the year, by which point, it says, harm will already have been done1. No further Government measures beyond the rebate and Council Tax support had been announced at the time of the statement1.