The UK is experiencing an energy crisis and with temperatures dropping, homeowners are becoming increasingly concerned about how they will pay their bills this winter. The Guardian recently reported that millions of households are expected to be spending almost a third of their income on energy by the spring. So, what is going to happen next?
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Changes to the price cap
Well, in January, the price cap – which governs the maximum amount that suppliers can charge – will rise again by 20% to £4,200 per annum. For the moment, the prize freeze of £2,500 that was introduced by the government in October remains in place.
In April, however, the price cap will change once again, and it is currently expected to fall to £3,700. At the same time, the government will cap bills at £3,000 with an extended price freeze.
Although this gives some short-term certainty, it is far less clear what will happen in the long term. Many analysts believe that the price cap will drop to around the £3,000 mark.
Cost of living payments
The government has introduced cost-of-living payments to low-income households and vulnerable groups who may need extra help to heat their homes, such as people with disabilities.
The energy bills support scheme will give eligible households an automatic discount of £400, which will be managed via energy suppliers and taken off energy bills this winter. £66 will be discounted in October and November, and £67 in December, January, February and March.
There are also £650 cost-of-living help payments available to eligible households alongside £150 disability benefit uplifts and £300 pensioner payments.
How to manage your bills this winter
Rising energy, food and inflationary costs mean that many households are really struggling. But there are things that you can do now to help shore up your finances and weather the storm. For example:
1. If you are struggling to pay the bills, then contact your supplier as soon as possible to discuss your options. This could include deferred bills and payment plans. Contact your local council too as they have discretionary funds for local households that are struggling with rising costs.
2. Look to add insulation to your home where possible, even if these are DIY measures – such as bubble wrap on single-pane windows, reflective panels behind radiators and draught excludes behind doors.
3. See if your energy firm is offering any help. For example, Octopus has sent some customers free heated throws.
4. Make sure you are claiming everything that you are entitled to by doing an online benefits check.
5. Rather than buying food from your usual brand, shop a brand lower to make savings where possible at the supermarket. Make use of food with short dates as well, which can be heavily reduced.
6. Consider the use of a short-term loan if you find yourself with cash flow issues*. For example, you might be waiting for your wages to come in when you start a new seasonal job and need some cash to tide you over.
7. Reduce energy usage as much as possible and consider using warm spaces such as local libraries.
Although we don’t yet know what exactly will happen to energy bills, the hope is that this winter’s shock will be sharp – but short – and that long-term prices will be far more manageable. In the meantime, do what you can to optimise your bills by being frugal and smart with your heating, claim any grants you can and keep your eye on the news for updates.
*Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk.