A lot can happen in a short space of time. On Thursday 08 September 2022, I was awaiting the announcement of the Government’s plans on energy bills, along with my journalist colleagues. Much had leaked, but there were many things we didn’t know, like what help would be available for businesses, or if people would be able to get out of expensive fixed-rate deals.
After the initial announcement, I rushed to Milbank Studios to film some guidance and commentary for the evening news bulletins. While I was there, it was clear that a much bigger story was breaking. Shortly afterwards, it became apparent what that story was.
The announcement of the death of the Queen has transformed the UK and the period of national mourning [dominates/dominated] the news. Yet the cost-of-living crisis continues and many people are deeply concerned about the energy crisis. So here’s an update on where we are right now – and what to watch out for.
What the Government announced
The Government’s scheme is called the ‘Energy Price Guarantee’ and applies to England, Scotland and Wales, with a reassurance that Northern Ireland will be provided with as similar deal as possible when the details have been agreed. The guarantee will last for two years.
This means the average household will have their bills capped at £2,500 a year – not the jaw-dropping £3,549 announced by Ofgem in August. That’s still a nearly 30% increase on the last price hike (£1,971) – and crucially that’s still too high for many people to afford.
If you have a ‘pre-payment’ (key) meter then the price cap will also apply. However, to my immense disappointment it looks like this way of paying will still be more expensive – which needs to change.
At long last, businesses will also receive help, though it has since emerged that this may not arrive until November (though it will be backdated). That’s because the Government are still working out how this form of support will be given in practice. It’s only temporary relief though as the scheme is proposed to last just six months, putting many small and medium businesses at risk of not surviving.
In addition, I’m assured that the millions of people who weren’t covered by previous schemes and grants will receive ‘equivalent’ help. This includes people who use heating oil, those who live in community-style housing like caravan parks, people living in buildings where they collectively pay for energy and those who’s landlord pays the energy bill.
What do I need to know – and what are the catches?
As with the other energy price cap announcements, the ‘average’ examples are not what you’ll actually pay. This will vary depending on what you use. MoneySavingExpert have a great calculator on their website, though you’ll need your annual or monthly energy consumption (check your last bill)
The big political question is, who pays for all of this? The cost of the scheme is estimated at £130 to £150 billion. The Government has said that this will come from increased borrowing (like selling bonds to investors). However, for hundreds of years, these bonds have had to be paid back with interest when they mature. Which means the taxpayer pays the bill ultimately. Many have expressed disappointment that the Government hasn’t taken the opportunity to impose another windfall tax – or even renationalise parts of the industry.
Support for businesses is disappointing. Though some businesses have been classified as ‘vulnerable’ (like pubs) it’s not clear how this will be defined. It’s vital that businesses are helped to survive to support our wider economy – shop local if you can and keep them in business.
What support is available?
All the previous grants and support announced for people struggling financially are still going ahead. We will all receive the £400 energy grant in six instalments from October.
As I’ve mentioned in previous columns, if you can’t afford you bills now, tell the firm you are in financial difficulties and they should come up with a tailored plan to suit your needs. You can find a full list of all the energy grants, help and support you can expect here.
Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist.