Energy prices rise at eight times the rate of earnings

The Momentum UK Team 18 November 2013

Since October 2010, households have had to deal with price rises from the “big six” energy companies that are eight times higher than the increase in average earnings.

New findings from Citizen’s Advice show that the big six have increased prices by a total of 36% since October 2010 - while average earnings have increased by just 4.4% in the same period. The energy price rise is also three times the rate of inflation, which has increased by 10.2% since October 2010.

Citizen’s Advice are reporting a surge in the number of people struggling with their energy bills, with some parents having to make the choice between heating their homes and feeding their children. Since the announcement of the first price increase in October this year, calls to Citizen’s Advice about energy issues have doubled, with 83,000 seeking online help - a 44% increase on the 33 days before the announcement.

One of the main worries expressed by Citizen’s Advice is that people are getting into debt to pay their energy bills. Analysis found that 28% of those who seek help with energy bills from Citizen’s Advice also have a debt problem. Of those, half are in debt to their energy supplier. Eighteen percent have credit or store cards, and one in five have an unsecured personal loan. Separate research from the regulator Ofgem this week showed that 5% of all energy accounts are in debt.

Citizen’s Advice Chief Executive Gillian Guy said:

“Enormous escalations in energy prices are creating a desperate situation in many households. People find they do not have enough money coming in to pay for everyday essentials as increases in daily costs are outstripping low rises in earnings. As we head into winter, and the latest price rises begin to kick in, more and more people are likely to reach crisis point as they struggle to heat their homes and feed their families.

“People should not have to get into debt in order to have a warm home. Energy companies and the Government need to look at how they can reduce the pressure energy bills are putting on people’s finances.”