OFGEN has announced that the Energy price cap is set to rise by 80%, which will push many more UK households into debt. The price of electricity will rise on average from 28p per kWh to 52p in October-December and gas will go up from 7p to 15p per kwh. The announcement comes amid a cost of living crisis, with prices soaring and taxes and interest rates going up.
Commenting on the increase to the energy price cap, Chris Malloch, Head of Cleanslate, said:
“The 80% rise in the energy price cap is set to leave Scottish households facing steep hikes in their bills from 1 October and send the average household cost from £1,971 to £3,549 per year, an increase of £131.50 per month.”
“This is set to push more people below the poverty line, with many wondering what this will mean for their personal finances.”
“In a recent study, the FCA found that 52% of people wait a month or more after getting into trouble with their finances to get help, and more than half of those regret not getting help sooner.”
Chris Malloch continued: “There is a misconception that reaching out for advice will cost more money or impact your credit score, but this is not the case. Speaking to an FCA-regulated debt adviser can help clarify available options at an early stage.”
“For those who are struggling with the burden of debt, there are a variety of solutions available in Scotland such as the Debt Arrangement Scheme which is less severe than bankruptcy and won’t affect your home or possessions. With no end in sight to the cost-of-living crisis, and with a further rise in the energy price cap expected in January, it’s important to act now and seek support early before bankruptcy becomes the only option – the more time you have to deal with the issues at hand, the more options may be available to you.”
Commenting on Ofgem’s price cap increase announcement, Energy Secretary Michael Matheson said:
“This announcement from Ofgem of an average 80% increase on energy prices will only escalate the enormous strain upon the many thousands of households and businesses across the country who are already having to deal with April’s energy bill increases and wider cost of living pressures.”
“Today’s price cap announcement and increase imposes a burden that customers simply cannot be expected to carry. The only acceptable course of action now is for the UK Government, who have the necessary policy levers and borrowing powers at their disposal, to take immediate steps to cancel the increase for all households.”
“The Scottish Government is treating this situation as a public emergency. We will continue to do everything we can to mitigate the effects for consumers. Our foremost concern is for those in or at risk of fuel poverty and it is imperative that those worried about or struggling with heating their homes access the information and support they need to reduce their energy bills.”
“To this end, the Scottish Government has prepared a £1.2 million package to enable the immediate expansion of energy advice services to ensure households and businesses receive the support and guidance they need. On Monday, the £2 million Social Housing Fuel Support Fund, administered by the Scottish Federation of Housing Associations, will open, providing tangible help to our most vulnerable households.”
“No single government, company or organisation can solve this crisis alone. It requires a collective response commensurate to the situation. We will continue to work with our partners, energy companies and stakeholders to do everything we can to help the people of Scotland through this deeply unsettling time. We will also continue to press the UK Government to reform the energy market to prevent this situation occurring again in the future.”
The Scottish Government has allocated almost £3 billion in this financial year that will help households face the increased cost of living. This includes the provision of services and financial support not available elsewhere in the UK that is helping to reduce everyday costs and increase incomes. It also includes £10 million to continue our Fuel Insecurity Fund – to help households at risk of severely rationing their energy use, or self-disconnecting entirely. This includes direct support for households using any tariff or fuel type, and is delivered via trusted third sector partners – the Fuel Bank Foundation, Advice Direct Scotland and the Scottish Federation of Housing Associations.