‘Options running out’ for households as energy prices predicted to soar even higher

Money Advice Trust responds to latest estimates on energy price rise

New forecasts out today predict that household energy prices will rise to over £4,200 in the new year, a rise of £650 compared to estimates last month.

The forecast is based on analysis from Cornwall Insight who say the increase reflects the increase in wholesale energy markets and a change in calculation methodology set for finalisation from Ofgem.

Energy arrears is now the most common debt type amongst people contacting the Money Advice Trust’s National Debtline service.  In the first quarter of 2022, 32 percent of callers to National Debtline had energy arrears – up by ten percentage points since 2021.

More than four in ten (45 percent) of callers to National Debtline have a deficit budget where they do not have enough coming in to cover essential costs. The Charity is warning that the options for many people are running out, and further support is needed as soon as possible.

Three debt advice charities – the Money Advice Trust, StepChange Debt Charity and Citizens Advice – have called on Ofgem to increase protections for people in or at risk of energy arrears. The charities full set of recommendations are outlined in ‘Rising energy prices: Protecting energy customers in debt’ briefing.

Jane Tully, director of external affairs and partnerships at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:

“With today’s figures estimating even higher energy prices than previously predicted, the options for many households are running out without further intervention.

“Government support announced so far to help with energy and cost of living price rises has been welcome but does not get close to matching the scale of the challenge households now face.

“At National Debtline and Business Debtline, we are hearing from more and more people struggling to afford soaring energy bills and whose incomes cannot keep up with rising costs.

“Further targeted support is needed for those on the lowest incomes, including significantly raising benefits and additional direct support to help households afford energy bills this winter.

“Ofgem also needs to do more to protect households struggling with their energy bills including ensuring energy firms treat people struggling to pay or already in energy arrears fairly and halting potentially harmful debt collection practices.”