Severn Wye are relieved to see some action from the UK Government today to prevent further spiralling of energy bills, however questions remain as to how the most vulnerable in society will be supported through this crisis.
After months of doubt today’s energy price guarantee announcement brings much needed certainty for households across the UK, and we’re pleased to see this action being taken. Freezing domestic energy bills at £2,500 will prevent some middle-income families from falling into fuel poverty and will enable other households to budget and reduce their energy use in a more stable energy climate. Over the last few months our frontline energy staff have received increasing numbers of calls from households who have well-insulated and energy efficient properties, who would normally pay their energy bills without a second thought, but who were increasingly concerned about keeping up with spiralling costs. This announcement will give households like this some clarity over the winter months.
We’re also pleased to see some long-overdue support for businesses in the form of a six-month equivalent guarantee for businesses, where the unit price will be capped at the domestic price. However, the details of this support remain unclear, including how the three-month review process will identify which vulnerable businesses and industries need further support. Our business team have been hearing from a range of clients struggling to get quotes for their energy as a volatile market has left many suppliers unwilling to offer prices. Tariffs that have been offered are sometimes five times higher than the rates that small businesses have been paying in previous years. We’ve also seen an increase in enquiries from traditionally low-energy businesses (often office-based), that are now significantly concerned about their energy bills. The support announced today will give some businesses a brief respite this winter, but much uncertainty remains.
However, questions also remain over the extent to which this move will benefit the estimated 6.9 million households that will be living in fuel poverty despite the freeze and cost of living payments. The End Fuel Poverty Coalition estimate that 16.4 million people will be living in fuel poverty after October, accounting for around 25% of the UK’s population. Based on previous year’s figures, this is a 100% increase on the number of people living in fuel poverty across the UK, an astronomical rise. Despite the warm, bright summer, an estimated 6 million households are already £1.3 billion in debt on their energy accounts. Coupled with rising costs to other basic essentials such as food, this means that increasing numbers of people will have to cut back on everyday necessities and require support from other third sector organisations, such as food banks.
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Severn Wye CEO Sandy Hore-Ruthven is glad to see some progress, but remains concerned:
The freeze on energy prices for two years is welcome. It will stem the tide of people falling into fuel poverty and means millions will keep warm this winter. However, whilst the freeze will help some, millions more will still be forced to choose whether they can heat their homes. At Severn Wye demand for our services is far beyond our capacity and we see the terrible impact these prices rises are having in our region. We will continue to do our best to support people but without more help for the most vulnerable a difficult winter lies ahead.
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Whilst right now keeping families out of fuel poverty should be the focus of political efforts to combat the energy crisis, as a sustainability and energy efficiency charity, Severn Wye also believes that a long-term energy conservation strategy is essential to bringing down prices and establishing energy security for the future. It is disappointing to see the green levy temporarily suspended as part of today’s announcement, although we hope that this remains a temporary measure.
The freeze announced today is expected to cost in excess of £100 billion, a huge sum of money that will likely be paid back through higher energy costs over a longer period. We would urge the UK Government to re-establish energy conservation efforts to help UK households increase the energy efficiency of their homes, saving carbon and money in the long-term. Estimates suggest the cost of retrofitting all UK homes to an EPC rating of C would cost in the region of £38 billion, a significant sum but one that pales in comparison to the current cost of the energy crisis.
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