Is the UK living in fuel poverty?
Around 2.5 million households live in “fuel poverty”. Household utilities are quite easy to take for granted until the next bill rolls around, but there are many people who struggle to make ends meet when it comes to their gas and electric.
While things are improving with increased policing of energy suppliers, more can be done to improve the situation.
We have taken a look at the current landscape of energy suppliers; the levels of account debt UK consumers are facing and how to ensure you’re getting a fair deal as prices rise throughout Autumn and Winter.
- 10,600 people per year are dying either as a direct result of fuel poverty or conditions relating to living in a cold home– comparable to the amount of deaths from prostate, (11,000) and breast cancer, (11,500)
- Doing research and switching energy providers can lead to savings of up to £389 annually
- Some customers are being left to accrue debts of up to £600 before being offered financial assistance (as much as £1,600 in some cases)
- The Big Six energy suppliers, (British Gas, EDF, E.ON, npower, Scottish Power & SSE), all fall into the bottom 10 for customer satisfaction
Annual price rises & the importance of switching
Energy prices aren’t known for their consistency. In fact, it’s been found that the ‘Big Six’ are raising their prices by up to £76 every year. When switching could save you as much as £389 on average annually, it might be time to forgo the comfort of letting contracts roll over and research the best deal for your circumstances.
However, be sure to do your research as some providers will require switching and installation fees which reduce the overall savings.
The graph below shows you the benefit of moving away from the Standard Variable Tariffs of larger providers to either try and get a better deal from them, or shop around to save hundreds of pounds a year.
Could switching to a smaller supplier bring more customer satisfaction?
Thankfully, Brits are getting better at weighing up their options and switching when their plan ends – here are the figures from January to June 2018 alone:
Although larger providers have brand recognition that makes consumers feel safer opting into their service, they are by no means leading on customer satisfaction. Here are the top and bottom 10 UK providers (ex. Northern Ireland) based on 31 companies and their overall approval ratings according to a 2018 Which? report.
In fact, as you can see from this league table – all of the Big Six actually place in the bottom 10 when ranked on the following criteria:
- Bill accuracy and clarity
- Customer service (phone and online)
- Complaint handling
- Advice on energy consumption reduction
- Value for money
Energy debt Britain
It’s no secret that energy suppliers get a bad name for their pricing practices. Of course, this has a knock-on effect for their customers, with many finding themselves falling into debt. Recent figures have placed the amount of domestic accounts in debt as…
- Electricity: 1.2 million
- Gas: 1 million
…however, this doesn’t factor in all of the smaller providers disrupting the marketplace, so the figure is likely to be a lot higher.
A 2018 Ofgem report showed that gas and electric customers falling behind on payments, as of the end of 2017, were averaging around £600 debt before being placed on a repayment plan, a 25% increase since 2012. These customer arrears are often termed ‘take-on debt’.
Some extreme cases, such as the widely publicised debacle with npower in 2017, saw customers racking up debts of £1,600 before action was taken.
The main cause of this problem are suppliers who allow customers to accrue large debts before implementing any sort of support system.
While improvements have been made in reducing the number of consumers with smaller levels of debt, the number of people with arrears of £600+ grew by 1/3 from 2006 to 2014, only just starting to show slight signs on improvement.
The human cost of energy poverty
While the financial aspect of energy poverty is widely talked about, there is a growing problem that doesn’t get as much attention. The human cost.
An average of 3,000 people per year are dying, directly due to their inability to heat their own homes. This shocking figure places deaths caused by fuel poverty on par with whose caused by prostate or breast cancer.
The UK has the second highest rate of excess winter fatalities in Europe (just behind Ireland) which campaigners assert is completely avoidable.
Steps are being taken to curb this issue with schemes like the Warm Home Discount offering £140 off annual energy bills for low-income households but, as the average variable dual fuel tariff sets UK households back £1,138 per year, there is clearly still a way to go.
The current UK gas & electricity market
So, who controls the UK’s energy market? With an influx of smaller operators flooding into the market offering more variety and servicing options, who are consumers turning to, to power their homes?
Despite the increasing amount of options available, it’s clear that people feel safer dealing with larger, recognised brands despite the fact they’re likely to cost more and have probably poorer service. There are 71 active suppliers and yet the majority of people continue to stick with the one of the Big Six, showing just how much brand power they have.
Many smaller companies, however, offer good deals and high customer satisfaction, as detailed above, so it needn’t be the case that you feel stuck with only 6 options.
You can save money, have a good level of customer satisfaction and keep your service uninterrupted if you choose to research and compare deals and find the one that suits you best.
If you are looking to switch your provider, be mindful of any penalties for leaving or joining another, as these may negate any savings you might make.