Dr Elaine Robinson a Research Associate at Loughborough University, who specialises in quantitative analysis to identify patterns and trends related to low income and fuel poverty, explains why the increase is set to hit households hard, especially those on low incomes.
“The latest increase in the energy price cap is a response to global market prices rises for gas and Ofgem have highlighted the need to reduce our dependence on gas. The 6.4% increase is on top of rises in January 2025 and October 2024 and equates to an annual energy price rise of 9.4%.
“At the same time, benefits are being uprated by only 1.7%, which will have consequences for those on low and very low incomes.
“The state pension is set to rise by only 4.1%, combined with the loss of the winter fuel payment for all but the poorest pensioner households.
“Essentials, such as energy, make up a greater proportion of spending for low-income households, so these price rises will have a greater impact on them.”
In response to the increase, the government is making plans to expand the Warm Home Discount, which is said will offer financial help to nearly three million more households that need it most. Dr Robinson explains that this may not be enough and that a debt relief scheme is needed urgently.
“Expanding the Warm Home Discount scheme, currently £150 annually, will offer some help to those most in need, but it may not be enough, given that the price cap changes mean that average bills will rise by £241 in the year to April 2025.
“There are record levels of energy debt, which is currently inflating bills for all consumers and there needs to be an effective debt relief scheme to reduce the cost of servicing that energy debt.
“Ofgem figures show average arrears, where there is no debt repayment plan in place, of £1,568 for electricity and £1,324 for gas, as at Q3 2024 – an annual increase of over a third on the previous year.
“Debt amounts for those who have debt repayment arrangements in place are lower at £712 for electricity and £596 for gas, but the whole situation looks set to worsen, given that this data does not include the October 2024 and January 2025 price rises.”
Dr Robinson went on to comment that more attention also needs to be given to reducing our need for energy, by looking at home improvement solutions that would reduce our need for using energy.
“The main part of our domestic energy bills is due to heating our homes. This emphasises the need for improved insulation and draught-proofing to reduce energy need. A whole house retrofit rather than a piecemeal approach to energy efficiency improvements would be favourable, including a ‘fabric first’ approach to improving energy efficiency and ensuring adequate ventilation to prevent damp and mould formation.”
Elaine’s research interests include sustainable housing and energy policy and how these aspects relate to living standards. She is part of the University’s Centre for Research in Social Policy.
To request further comments, please email publicerelations@lboro.ac.uk.
ENDS
* (based on 1,071,228 electricity customers and 887,823 gas customers in arrears, 3.7% of all customers. Numbers of customers in arrears show a slight increase on the previous year).
** (based on 806,508 electricity customers and 656,545 gas customers with debt repayment plans in place, 2.8% of electricity and 2.7% of gas customers, respectively. Numbers of customers with debt repayment arrangements show a slight decline based on the previous year).