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Coronavirus: 3 million households unable to deal with any increase in bills

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Saleha Riaz
·3 min read
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Ofgem has proposed a £21 increase to the energy price cap between 1 April and 30 September 2021 to help suppliers cover coronavirus costs. Photo: Getty Images
Ofgem has proposed a £21 increase to the energy price cap between 1 April and 30 September 2021 to help suppliers cover coronavirus costs. Photo: Getty Images

More than 3 million households in the UK say their finances are stretched so tight due to the coronavirus pandemic that they would be unable to cope with any increase in their bills, new research revealed.

The report by comparison and switching service Uswitch comes two days before the energy price cap rise is expected to be announced.

UK energy regulator Ofgem has proposed a £21 ($28) increase to the energy price cap between 1 April and 30 September 2021, based on typical usage, to help suppliers cover coronavirus costs. During the pandemic, many consumers struggled to pay bills and have built up debts to their supplier.

The level of the price cap may be more though, because the coronavirus charge will be levied on top of any separate changes to the cap.

Moneysavingexpert.com expects prices could surge by an estimated £84 a year.

On 5 February, Ofgem will reveal how the price cap will change from 1 April.

Energy customers are already feeling the strain, with households estimating that their power usage is 8% higher than this time last year due to spending more time at home during lockdown, the report said.

More than one in 10 (11%) consumers said they could not cope if household bills were to increase, while over a quarter (27%) warn they would be forced into debt if their expenses rose by just £10 a month or less.

The research was conducted online in January among 2,004 adults, weighted to be nationally representative.

Customers on Standard Variable Tariffs (SVTs) and prepayment meters will be directly affected by an increase in the price cap, the report said.

More than half of households (53%) on SVTs and prepayment meters are stressed by the thought of the price cap rising and fear they won’t be able to pay all their bills or will have less money to spend on other things.

READ MORE: UK regulator gives go-ahead to £40bn energy investment plan

Almost three in 10 people on prepayment meters (29%) say they regularly worry about paying their bills, while 12% of people on SVTs have the same concern.

Uswitch.com is encouraging households to switch to a fixed deal to avoid market volatility and potentially reduce their energy bills.

Sarah Broomfield, energy expert at Uswitch.com, noted that “millions of UK households have suffered financial challenges during the pandemic, and the thought of increased bills is causing many people additional stress.

“If you are on an SVT, we recommend you switch energy tariff to a fixed deal. These are far less costly than SVTs and let you fix the cost of your energy bills for a whole year,” she said.

Broomfield added that those worried about getting into energy debt should contact their energy supplier as soon as possible to get advice and set up a repayment plan.

Last week, Ofgem recommended the creation of an independent body “to help lead the path to net zero at the lowest cost to consumers.”

The body would be separated from the National Grid and run the electricity system, helping to charge millions of electric vehicles and “enabling a huge increase in renewable power while maintaining secure energy supplies.”

Ofgem estimated that an independent body with responsibilities for running the electricity system could save consumers between £400m to £4.8bn between 2022 and 2050.

WATCH: How to save money on a low income