As households face a £3,000 drop in spending power, what to do if you can’t afford your energy bill

·4-min read
As households face a £3,000 drop in spending power, what to do if you can’t afford your energy bill

Higher energy bills will cost households in the UK £3,000 a year in spending power unless the Government acts, research from the Resolution Foundation has found.

It estimated without more intervention, household incomes would fall by 10% and three million more people would be pushed into poverty.

Another report from University College London predicted that high energy bills could worsen infant mortality. It said babies would be at higher risk of cot death if parents wrapped them in lots of layers and also if parents took them into their beds to keep them warm.

The concerns are prompted by the rise in the dual fuel energy cap in October to £3,549 and potentially to more than £4,000 in January. Last July inflation went up to 10.1 per cent, the highest it has been since February 1982.

As a result, many people are worried about how they will afford to pay their energy bills this winter.

Consumer champion Martin Lewis has warned that the “cataclysmic rise” in energy bills is a “financial emergency that risks lives”.

He has urged Tory leadership candidates Rishi Sunak and Liz Truss to lay out their plans for combating the cost of living crisis.

But in advance of the government announcing any plans for helping households this winter, consumers may want to seek out advice for what they can do themselves.

Fortunately, there is help out there for households who are struggling to pay their bills. From negotiating a payment plan with your energy company to applying for a grant, find out below how you can help avoid falling into debt or being disconnected.

Contact your energy supplier

If you’re struggling to pay your energy bills, contact your energy supplier. It has to help come up with a solution for how you can pay it back under Ofgem rules.

Together, you should negotiate a deal that works for both you and the energy company. This could include a payment plan that allows you to make payments in instalments.

You can tell the supplier how much you can afford to pay based on your income, how much you spend, any other debts you have, as well as your personal circumstances.

It will also consider how much energy you’ll be using and you can give it regular meter readings to ensure its estimations are accurate.

Alternatively, the supplier may give you more time to pay, access to a hardship fund, or advice on using less energy.

Many households are worrying about how they will afford to pay their bills (PA Wire)
Many households are worrying about how they will afford to pay their bills (PA Wire)

Use your benefits to directly pay debts

The Fuel Direct Scheme may allow you to pay your energy bill debt directly from your benefits.

If you receive income-based Jobseeker’s Allowance, Income Support, income-related Employment and Support Allowance, Pension Credit, or Universal Credit, you may be eligible.

The Fuel Direct Scheme will automatically take a fixed amount from your benefits to cover what you owe the energy company.

To apply for the Fuel Direct Scheme, contact the Pension Service or a Jobcentre, which will ask the energy company. If it agrees it will set up your repayment plan.

Use your benefits to directly pay for your energy bills

Once you begin paying your energy debt directly from your benefits, you can ask to pay for your current energy usage through your benefits too.

Be aware that until 2023, your energy supplier cannot make you pay your bills through your benefits or increase your payments.

But if you want to, contact the Pension Service or the Jobcentre and ask about paying your bills this way.

Heating bills are set to rocket in October and then again in January (PA Wire)
Heating bills are set to rocket in October and then again in January (PA Wire)

Apply for a grant

Many energy suppliers offer grants to their customers to help them pay off their debt, such as British Gas, EDF Energy, E.ON Energy, Octopus, Ovo Energy and Scottish Power.

Contact your energy supplier and see if it has a scheme or hardship fund that could help you. You will probably have to share details about your financial situation in your application, so it would be helpful to prepare this information first.

Furthermore, your local council may have a grant scheme that could help you pay, or you may be eligible for a government benefit.

The government has four benefits that can help struggling households this winter, such as the Winter Fuel Payment, Cold Weather Payment, Warm Home Discount and the Household Support Fund.

Helpful contacts for more advice and information

There are a number of resources for advice on how to deal with energy bill debt, such as the government’s Money Advice Service, National Debtline and the StepChange Debt Charity.

If you’d like more advice on getting help with your energy bills you can contact the Citizens Advice consumer helpline on 0808 223 1133 or National Debtline on 0808 808 4000.