Welsh Government urged to protect householders when energy hike strikes

Wales’ leading advice charity is urging the Welsh Government to protect householders who have been “hit hardest by the pandemic” from the upcoming energy price hike.

Citizens Advice Cymru, which is currently facing record demand for crisis support, was responding to Chancellor Rishi Sunak’s announcement this week that there would be a discount on energy bills, which would then be repaid over the next five years.

Rebecca Woolley, Director of Citizens Advice Cymru, warned that the measures would only provide “temporary relief” and do not go “nearly far enough” for those on the lowest incomes.

Echoing these criticisms, Dame Clare Moriarty, Chief Executive of Citizens Advice, has called the UK Chancellor’s measures to support people with their energy bills “strange, complicated and untargeted”.

This week, Ofgem, the UK energy regulator, announced a 54% increase in the energy price cap, meaning average bills are likely to reach nearly £2,000, rising by as much as £970 in some areas, with parts of Wales set to be the hardest hit in the UK.

The price cap is updated twice a year and tracks wholesale energy and other costs.

Temporary relief

Calling on the Welsh Government to intervene, Rebecca Woolley, Director of Citizens Advice Cymru, said: “The package of measures announced by the UK Government will provide some relief for all households in April, but it doesn’t go far enough for people on low incomes.

“Energy rebates are a buy now pay later solution which only provide temporary relief later this year.”

“And if the proposed reduction on Council Tax was introduced along similar lines in Wales, our analysis suggests that around 230,000 households on the lowest income may not benefit at all.

“The Welsh Government needs to intervene to make sure those who have been hit hardest by the pandemic, are not left even further behind.”

This week, Dame Clare Moriarty tweeted warning that the price cap announcement “is going to blow a hole in people’s finances.”

Today's price cap announcement is going to blow a hole in people's finances.

Here @CitizensAdvice we already see families facing the choice between heating and eating. Disappointed that none of today’s package was targeted at those on the lowest incomeshttps://t.co/2qPFE2quat

— Clare Moriarty (@ClareMoriarty) February 3, 2022

Speaking with Martin Lewis on BBC Radio 4’s The World Tonight, she called for alternative ways to offer support, saying “For people on low incomes who are the hardest hit, the way to get support to them is through the benefit system.

“We do have mechanisms that will get money to people and can help address that situation much more directly and quickly.

“People are already in really, really desperate straits making difficult choices between heating and eating.”

Martin Lewis added: “It is an absolute unprecedented nightmare that we never thought would happen.

“Ofgem announcing a 54% increase in the price cap… means, for a typical home, a rise of £700 a year on the first of April, and let’s just remember it that lasts for six months.

“This is a very significant problem that is hitting not just the most vulnerable, but stretching right up into low- and middle-income Britain

‘Discount’

According to ONS figures the worst-hit local authority areas include Ceredigion (£972), Gwynedd (£904), Carmarthenshire (£853) and Powys (£848).

Households on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year (difference due to rounding), while prepayment customers will see an increase of £708 from £1,309 to £2,017.

This week, Rishi Sunak announced a three-part plan, costing over £8.6 billion, to help with household fuel bills

Households will receive a one-off £200 discount from their energy bills this year, which will paid back at a rate of £40 per year for the next five years.

Households in England, which are in council tax bands A-D, will also receive a £150 rebate. The Welsh Government will receive £175 million in Barnett consequentials from the announcement.

Welsh Conservative Senedd leader, Andrew RT Davies MS, called for this to be “spent immediately on delivering households a tax rebate and giving all councils in Wales money for discretionary funding to help families.”

He said: “Soaring energy bills are a major worry for hardworking families across Wales and the UK and the Conservative Chancellor has once again stepped up to the plate to help people in a time of need.

“This announcement by Rishi Sunak and the Conservatives will mean so much to so many people and will help them meet the cost of living this winter, and I implore Labour to use the money wisely and swiftly to ease the cost-of-living pressures facing families across Wales.”

Catastrophe

Jane Hutt MS, Minister for Social Justice, said: “We are doing everything we can to support people in Wales with the cost-of-living crisis and rising energy bills, including doubling the Winter Fuel Support Payment to £200 and making increasing investment in our Discretionary Assistance Fund to help people who need urgent and emergency support.

“It is time the UK Government acted to support households and to address the turmoil in the domestic energy markets.”

Unite Union has said the energy cap rise is a cost-of-living ‘catastrophe’ for ordinary workers.

Unite general secretary Sharon Graham said: “The energy price cap rise will turn the cost-of-living crisis into a catastrophe for millions of people.”

“This will plunge at least one in four families in Britain into fuel poverty.”

“The policy announced today to provide loans to energy companies to reduce bills, in the short term, is yet another knee-jerk reaction.”

“It fails to address the calamitous increases coming in customer bills and ultimately means ordinary families will foot the bill for an energy crisis not of their making.”