Bills & Poverty pursue

Bills & Poverty pursue

15th May 2020

COVID-19: the impact on energy bills and fuel poverty
by Aoife Deery, CAS Energy policy team.

Despite Tuesday's welcome news about extended furlough payments, we at Citizens Advice Scotland remain concerned about how the COVID-19 outbreak is affecting incomes, poverty levels and peoples’ ability to pay their bills.

As the lockdown continues, the picture gets gradually clearer about what that impact is, particularly around energy bills. Talking about fuel poverty during the spring as the sun shines may feel counter intuitive, but people spending more time at home doesn’t just mean they use more heating. They also switch on their lights, kettles, laptops, chargers and TVs more often as well. The evidence shows that people are set to face higher bills.

Research published last week by comparethemarket showed that the average UK energy bill will increase by £32 a month during the lockdown. When compounded with the data coming through from our advice services and the uptick in hits on our advice pages, what is becoming evident to us is that while nearly all households will feel the pinch, people using pre-payment meters (PPMs) to pay for their energy are going to be hit particularly hard.

Our Market Pulse report earlier this year found that pre-payment customers are more likely to include single parents with dependent children, people who are unemployed, younger people and renters. These groups are known to be more at risk of fuel poverty and we also know that they are more likely to self-disconnect when they cannot afford their energy. As jobs are furloughed and lost, household incomes will drop and the financial pressure caused by COVID-19 might be the straw that breaks the camel’s back and leaves these households with no other option than to disconnect.

Aside from affordability, the lockdown also poses practical difficulties for PPM consumers. For those who are digitally-excluded, topping up their meter key or card requires a trip to a Paypoint or Payzone shop. Consumers who are self-isolating will find this difficult to do.

Thankfully, the UK Government recognised the problems facing PPM customers in the early days of the outbreak and came to an agreement with all domestic energy suppliers to protect those most in need during the disruption. Provisions to support people on PPMs include the suspension of meter disconnection, a third party being able to top up credit on behalf of vulnerable consumers, discretionary funds being added to PPM accounts and pre-loaded top-up cards being posted to consumers.

CAS welcomes these measures, as they address some of the logistical and financial challenges that PPM households are currently facing. This approach also chimes closely with what people have told us they want. We spoke to consumers in 2018 to find out the types of support that people in fuel poverty felt would be most helpful to them. Unsurprisingly, additional financial help - most often in the form of emergency fuel credit - came out on top.

Such findings are rarely more relevant than in times like these. For those in isolation and unable to leave the house, receiving a top-up device through the post loaded with credit could be the difference between keeping the power on and having a hot shower or self-disconnecting and having to use cold water.
We know that before the public health crisis people were already facing impossible choices on bills, and if anything the outbreak will make those choices even more difficult. Our own recent polling revealed that 31% of people in Scotland are concerned about utility bills during the outbreak.

In recent days, the talk of an impending deep recession following the crisis has increased. Households will see their incomes continuing to be squeezed and more and more households may find it harder to afford bills.

While there are some positive, hopeful conversations about a ‘green recovery,’ which may mean that our relationship with energy and how we use it will change, for us the priority is to support consumers and ensure that the government and suppliers’ good intentions are put into practice and that every household is aware of the help that is on offer, and how to access it. These measures are only as good as they are taken up, and we want every household requiring help to get it, quickly, efficiently and generously.

That is why we continue to monitor developments from both the UK and Scottish governments and offer insight from what we are seeing in our network to make sure the right steps are taken to help people.
If you or someone you know needs help accessing support then please contact us. The Citizens Advice network has had to change the way it works during this crisis, but every CAB is still offering advice remotely, over the phone or by email. You can also access our advice pages online or phone our national helpline.