Support on energy bills is “strange, complicated and untargeted”, says Citizens Advice Cymru

Citizens Advice Cymru has responded to the announcement of a near £700 rise to the energy price cap and measures outlined by UK Chancellor Rishi Sunak to support people with their bills.

The increase comes as the charity faces record demand for crisis support in Wales.

Households on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year (difference due to rounding).

Prepayment customers will see an increase of £708 from £1,309 to £2,017.

The increase is driven by a record rise in global gas prices over the last 6 months, with wholesale prices quadrupling in the last year.

It will affect default tariff customers who haven’t switched to a fixed deal and those who remain with their new supplier after their previous supplier exited the market.

The price cap is updated twice a year and tracks wholesale energy and other costs.

Rishi Sunak has announced a three-part plan to help with household fuel bills in a support package worth £8.6 billion.

That includes:

• £200 discount on their energy bill this Autumn for domestic electricity customers in Great Britain. This will be paid back automatically over the next 5 years.
• £150 non-repayable rebate in Council Tax bills for all households in Bands A-D – specifically in England.
• £144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax rebate (again England only).

Points two and three of the plan are devolved and will see the Welsh Government receive an extra £175m in consequential funding.

Welsh Conservatives have called for this to be “spent immediately on delivering households a tax rebate and giving all councils in Wales money for discretionary funding to help families.”

Rebecca Woolley, Director of Citizens Advice Cymru said: “The package of measures announced by the UK Government will provide some relief for all households in April, but it doesn’t go far enough for people on low incomes.

“Energy rebates are a buy now pay later solution which only provide temporary relief later this year.”

“And if the proposed reduction on Council Tax was introduced along similar lines in Wales, our analysis suggests that around 230,000 households on the lowest income may not benefit at all.”

“The Welsh Government needs to intervene to make sure those who have been hit hardest by the pandemic, are not left even further behind.”

Dame Clare Moriarty, Chief Executive of Citizens Advice, added: “This is a strange, complicated and untargeted package of measures.”

“For people on low incomes who need it most there are far easier ways for the Westminster government to deliver support.”

“If the UK government is serious about helping families facing the desperate choice between heating and eating it should use the benefits system.”

Unite Union has said the energy cap rise is a cost-of-living ‘catastrophe’ for ordinary workers.

Unite general secretary Sharon Graham said: “The energy price cap rise will turn the cost-of-living crisis into a catastrophe for millions of people.”

“This will plunge at least one in four families in Britain into fuel poverty.”

“The policy announced to provide loans to energy companies to reduce bills, in the short term, is yet another knee-jerk reaction.”

“It fails to address the calamitous increases coming in customer bills and ultimately means ordinary families will foot the bill for an energy crisis not of their making.”

“Given that taxpayers’ money is paying for the bail-out, these loans must come with substantial strings attached, including guarantees that jobs will not be lost.”

“Otherwise, they will just vanish into big corporate energy balance sheets.”

“Without government investment in sustainable domestic sources, such as new nuclear and renewables, the UK public, as well as the economy, will continue to be at the mercy of unstable energy markets.”

Welsh Conservative Senedd leader, Andrew RT Davies MS, said: “As the British economy continues its recovery from the pandemic, we must confront the global inflationary pressures caused by the world economy coming swiftly back to life.

“Much of this inflation is being driven by the rising cost of energy due to increased demand worldwide – and that is feeding through into pressures on the cost of living at home.

“Soaring energy bills are a major worry for hardworking families across Wales and the UK and the Conservative Chancellor has once again stepped up to the plate to help people in a time of need.

“With Labour ministers in Cardiff Bay set to receive £175 million as a result of the Chancellor’s action plan, it’s vital they use this money immediately to fund tax rebates and create a discretionary fund for local authorities to use on households who do not meet the criteria.

“This announcement by Rishi Sunak and the Conservatives will mean so much to so many people and will help them meet the cost of living this winter, and I implore Labour to use the money wisely and swiftly to ease the cost of living pressures facing families across Wales.”

Winter Fuel Support Scheme payment in Wales

Earlier this week it was announced that the  Winter Fuel Support Scheme payment in Wales will be doubled to £200 as the cost-of-living crisis intensifies.

The £100 one-off payment, which was launched in December, is now being extended to support eligible households with rising energy bills and costs.

Announcing the increased support for households, Minister for Social Justice Jane Hutt said:

“Right across Wales, people are seeing their bills rise and wages are being stretched like never before. From energy bills, to prices at the pumps and the costs of everyday essentials.

“We know some people are facing the incredibly difficult decision about whether they heat or eat. We’re in the middle of a cost-of-living crisis, which is getting worse.

Local authorities will process new applications from eligible households.

To be eligible for the payment, one member of the household must be in receipt of certain welfare benefits.

Further details are available on local authority websites, which will be updated to reflect the increased payment.

Councils have contacted people they believe are eligible. If they have not yet made an application, these can be submitted until 28 February.

People who have already received a £100 payment under the scheme do not need to anything – they will receive a further £100 payment in the coming weeks.