The UK government refused proposals from charities for an Emergency Energy Tariff for the most in need households and ruled out a "help to repay" scheme for people in energy debt in the Chancellor's Autumn Statement1. The decisions were reported by the End Fuel Poverty Coalition, which campaigns on fuel poverty1.
From 1 January 2024, Ofgem has confirmed that the average household's energy bill will increase by 5%, or £94 a year, from current prices1. Consumer Scotland put the January cap at £1,928 for a typical household, up from £1,8342. The two figures describe the same change in different terms: £94 a year is the increase, and £1,928 is the level the cap reaches.
The End Fuel Poverty Coalition said unit cost changes show decreases compared with last year, but these are offset by daily standing charges that have increased by 5% for gas and 14% for electricity1. Compared with pre-crisis levels, gas unit costs are more than double what they were and electricity costs are up 129%; standing charges are up 8% for gas and 119% for electricity1. Standing charges are now subject to a review by Ofgem1. Consumer Scotland said the typical energy bill in October 2023 was 50% higher than in October 2021, and that the typical price in the first quarter of 2024 will be 60% higher than in January 20222.
Energy companies drew similar levels, with 38% assigning them significant responsibility and 4% none; 15% gave external factors such as the war in Ukraine significant responsibility, and 13% said these had no impact1.
"We're devastated that the emergency energy tariff that would give hard-pressed families money off their monthly bills has not been adopted by the Chancellor in the Autumn Statement, but we've not given up."
Consumer Scotland reported that Ofgem found energy debt reached £2.6bn in summer 2023, its highest ever level2. Its Autumn 2023 survey, carried out between 2 and 18 October 2023 with 1,589 respondents, found 30% of households said they found it difficult to keep up with their energy bills, down from 35% a year earlier, implying around 750,000 households across Scotland2. Eight per cent said they were in energy debt or arrears in October 2023, and one third were cutting back on food shopping to afford their bills2. The Office for Budget Responsibility concluded that living standards are forecast to be 3½ per cent lower in 2024-25 than pre-pandemic1.
Why it matters for households
The January rise lands on bills at the point in the year when household finances are typically tightest, and it arrives without the two mechanisms charities had proposed for the households least able to absorb it1. For a home trying to hold down what it spends on energy, the split between unit costs and standing charges matters: standing charges are paid regardless of how much gas or electricity is used, so a household that cuts consumption still carries that fixed daily cost1. Consumer Scotland noted that increases to the standing charge mean some households, typically those with relatively low energy use, will see higher bills this winter than last2.
Energy debt at £2.6bn is the backdrop against which the help to repay proposal was declined2. Households already repaying arrears pay those repayments on top of ongoing consumption, which reduces the room to absorb a further cap rise2. The proposals and where they now stand are set out in A Social Tariff for Energy, and the closed crisis scheme that preceded them in The Energy Price Guarantee. For households already behind, Energy Debt and Repayment Plans and Crisis Funds, Hardship Grants and Energy Debt Help cover the routes that remain, while The British Gas Energy Trust and The Energy Debt Relief Scheme deal with debt-specific support. The policy department responsible is covered under DESNZ, and the wider link between bills and sovereignty under Energy Bills and Energy Independence.
What happens next
The January 2024 price cap takes effect on 1 January 20241. Ofgem's review of standing charges is under way; no outcome date has been reported1. No further energy bill affordability support was provided in the Autumn Statement, and no replacement for the declined Emergency Energy Tariff or help to repay scheme has been announced1.
Sources2 cited
- Energy bills up in January as public blame Government for crisis, endfuelpoverty.org.uk
- Energy Tracker: Insights from latest survey, Autumn 2023 (HTML) | Consumer Scotland, consumer.scot