UK households falling behind on energy bills even before huge rise

<gu-island name="KeyEventsCarousel" deferuntil="visible" props="{"keyEvents":[{"id":"62f354bb8f084d500ca2293c","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Derek Lickorish, chairman of the energy supplier Utilita Energy and former chair of the government’s committee on fuel poverty, is calling for a “social tariff” funded by the Treasury to help the poorest in society.

","elementId":"a5c46eca-7623-42ed-a88d-d5c99ba9bb93"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"

\n

The situation is absolutely dire and I am astonished that we don’t see the two political contenders for prime minister declare a unity of purpose over this issue along with the current prime minister and start sorting it out. We have to do something very profound, we have to do it quickly because all the time we’re sitting here the clock is ticking and the price of gas keeps on increasing.

\n

When Rishi Sunak announced the last package of measures to help, the closing price of gas on 26 May was 237p a therm. The day before yesterday the price of gas closed on the market at 463p a therm. That’s gone up 90%.

\n

The time has come to put in place a social tariff to help the poorest in society and get on with it. And if we were to get on with it now we could have it in place by 1 January and we need dramatically the help that customers need for this winter and that looks like another £800 to £1,000 and then actually fix the problem for the fuel poor and vulnerable which looks to be 10m households.

\n

It has to be a properly funded social tariff by the Treasury. That will cause more borrowing but is essential if we are to take the stress out of it for the poorest.

\n

","elementId":"67350940-8c11-4a0c-94ef-0e17305d558d"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Liz Truss is talking about tax cuts, but Lickorish said the 4.5m of the poorest households who earn less than £12,500 a year don’t pay any tax so would not benefit, nor would those on benefits.

","elementId":"11de7128-5e63-4bc9-a96e-b0e9452b05cb"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1660114107000,"blockCreatedOnDisplay":"07.48 BST","blockLastUpdated":1660114352000,"blockLastUpdatedDisplay":"07.52 BST","blockFirstPublished":1660114352000,"blockFirstPublishedDisplay":"07.52 BST","blockFirstPublishedDisplayNoTimezone":"07.52","title":"Utilita chair calls for social tariff to help the poorest","contributors":[],"primaryDateLine":"Wed 10 Aug 2022 08.10 BST","secondaryDateLine":"First published on Wed 10 Aug 2022 07.28 BST"},{"id":"62f3424c8f082f7526a86bab","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.

","elementId":"66b7558c-fefd-44b7-ac11-62a4f9ce5a81"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

UK households owe £1.3bn to their energy suppliers, two months before bills are set to soar by more than 80%.

","elementId":"367c5625-f218-4564-9bcc-afdbf0720296"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

The overall debt bill is already three times higher than it was a year ago, experts at Uswitch said today, and it seems likely it will grow further over the winter.

","elementId":"5dd9dc1d-acb6-4490-8f7e-a9b2296e63ac"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Six million homes across the UK owe an average of £206 to their energy provider, according to the uSwitch report. In April the same average debt was £188.

","elementId":"e30f9d79-f301-4d03-8f79-94ec69a4cd9f"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Normally at this time of year people build up credit to help even out heating bills during the winter months.

","elementId":"9eeb789e-1f12-4691-af9f-285871238a49"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Th energy regulator Ofgem is expected to hike the price cap on energy bills to £3,582 a year for the average household from October, according to a new forecast. Analysts at Cornwall Insight predicted further rises, to £4,266 in January and then £4,427 from the start of April.

","elementId":"fe4d4faa-e660-423e-aa71-59a6bc4c0184"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Justina Miltienyte, head of policy at uSwitch, said:

","elementId":"7e5fb869-dab7-4225-a827-93c9dd4bdcfb"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"

\n

Energy debt has hit an all-time high with the worst possible timing, turning this winter’s energy price hike into a deeply precarious situation for many households.

\n

This is an alarming situation, as summer is traditionally a time when households are using less power for heating, which helps bill payers to build up energy credit ahead of the winter.

\n

","elementId":"c47bdd6c-e7cf-47f1-bc09-3317afb60c61"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Markets are waiting for the latest US inflation figures for July, out at lunchtime. We are expecting inflation to ease to 8.7% from 9.1%, largely due to recent sharp falls in gasoline and other energy prices.

","elementId":"5d0d6827-09b3-4548-8a9a-178bbf9ee11c"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

However the bigger concern is around core prices, which exclude volatile items like food and energy and are expected to rise at an annual rate of 6.1%, up from 5.9%.

","elementId":"d925d75a-91c4-4a9f-8e0f-4f010a452169"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

In Germany, final figures show that inflation eased to 7.5% in July from 7.6% in June, but remained high.

","elementId":"4f9089c1-b0c1-4914-a8cd-49bfe492d4df"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

The €9 rail ticket offered for unlimited travel and the fuel discount had a downward effect on the rate, as did the removal of the EEG renewables surcharge in July, said Destatis, the German statistics office.

","elementId":"8e1d4078-352c-4c1e-b91c-3a9864e6513d"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

In China, consumer price inflation is rising at the fastest rate since July 2020, at an annual pace of 2.7% last month, pushed up by higher pork prices. Food prices rose 6.3% compared with a 2.9% uptick in June. Pork prices jumped 20.2%, reversing a 6% decline in June as production slowed.

","elementId":"73bd3367-506d-405c-ac92-4a5a493f95fc"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Factory gate prices eased to a 17-month low, however, despite global cost pressures, as slower domestic construction weighed on demand for raw materials. China’s producer price index rose 4.2% year-on-year, down from 6.1% in June, according to the National Bureau of Statistics.

","elementId":"90d16bce-fb4a-40cc-8191-985f2eaac348"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Producer prices fell 1.3% in July from June, the first monthly drop since January, with the biggest falls in the price of metals and petrochemicals.

","elementId":"ccf0ffb3-0dda-4d7b-86e4-e26abba77b9d"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

This is giving Chinese policymakers room to stimulate the flagging economy, in stark contrast to central banks elsewhere that are scrambling to rein in rampant inflation with aggressive interest rate hikes even as recession looms.

","elementId":"96c07093-e991-4862-b6f5-0bc526c2263c"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

The Agenda

","elementId":"755960bf-6cdf-4495-824c-b03ab5b192e2"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

9am BST: Italy inflation for July final (forecast: 7.9%)

1.30pm BST: US Inflation for July (forecast: 8.7%, previous: 9.1%)

5pm BST: Russia inflation for July (forecast: 15.3%)

","elementId":"46a77b3b-ea3e-4b3b-a01b-26ca67832697"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1660112903000,"blockCreatedOnDisplay":"07.28 BST","blockLastUpdated":1660114377000,"blockLastUpdatedDisplay":"07.52 BST","blockFirstPublished":1660112903000,"blockFirstPublishedDisplay":"07.28 BST","blockFirstPublishedDisplayNoTimezone":"07.28","title":"Introduction: UK households’ energy debt at record high even before bill rises","contributors":[],"primaryDateLine":"Wed 10 Aug 2022 08.10 BST","secondaryDateLine":"First published on Wed 10 Aug 2022 07.28 BST"}],"filterKeyEvents":false,"format":{"display":0,"theme":0,"design":9},"id":"key-events-carousel-mobile"}”>

Key events

<gu-island name="TopicFilterBank" props="{"availableTopics":[{"type":"WORK_OF_ART","value":"Today","count":2},{"type":"ORG","value":"Utilita Energy","count":1},{"type":"ORG","value":"Ofgem","count":1},{"type":"GPE","value":"Russia","count":1},{"type":"ORG","value":"Treasury","count":1},{"type":"PERSON","value":"Rishi Sunak","count":1},{"type":"GPE","value":"China","count":1},{"type":"ORG","value":"National Bureau of Statistics","count":1},{"type":"ORG","value":"Octopus Energy","count":1},{"type":"ORG","value":"BBC radio 4","count":1}],"format":{"display":0,"theme":0,"design":9},"keyEvents":[{"id":"62f354bb8f084d500ca2293c","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"