October’s price cap hike will leave almost one in four people unable to pay their monthly bills, with the proportion swelling to more than one in three when the price cap is updated again January, Citizens Advice has warned.
The increase, which Ofgem is due to confirm next week, is expected to see the cap hit nearly £3,600 in October, according to recent forecasts by industry analysts. It is then predicted to rise to almost £4,300 in January when the cap receives its first quarterly update.
Citizens Advice recently conducted a representative survey of 6,000 UK adults via ICM Unlimited. After people who responded ‘don’t know’ or ‘prefer not to say’ were excluded from the analysis, more than 3,900 were left in the sample.
Of the remaining respondents, almost one in four (24%) said the amount of money they currently have left each month after paying for their essential bills is less than the average increase that would be seen if the price cap rose to £3,582 in October as forecast.
This proportion – equating to 13 million people across the UK – is double the percentage who said they are currently unable to pay their essential bills.
More than one in three respondents (34%) – equating to 18 million UK adults – said they would be unable to cover the increase if the price cap reached £4,266 in January as predicted.
In an online briefing on Wednesday (17 August), Citizens Advice chief executive Clare Moriarty said the numbers are “of a scale that none of us really know how to contemplate”.
The charity additionally warned that more than half (53%) of those expected to be in the red each month following the next price cap update will be ineligible for the additional government support announced for those on benefits, disabled people and low-income pensioners.
Meanwhile, Citizens Advice has also published its latest data dashboard which highlights the impact the cost of living crisis is having on consumers and its services.
The dashboard reveals that the charity is continuing to overshoot projections for the number of people seeking its services who cannot afford to top up their prepayment energy meter (PPM) and that last month was the fifth time this year record numbers of PPM customers had sought help.
The number of people who told Citizens Advice they had been unable to top up during 2022 reached more than 13,000 by the end of July. This was ahead of its projection of 12,600 and around seven times the number that had sought help at the same point in 2019 – the last normal year before the coronavirus pandemic hit. The charity expects this figure to reach 21,600 by the end of the year.
By the end of July, a cumulative total of more than 134,000 consumers had been given help with energy-related issues in 2022, compared to 55,600 at the same point in 2019. Citizens Advice currently expects to help a total of almost 234,000 people in 2022, more than twice number for 2019.
Last month more than 70,000 page views were recorded for the charity’s web page on help with rising living costs – a 40% increase on the previous record set in March 2020 when the first national lockdown was announced as a result of the pandemic.
Citizens Advice said the extent of the current cost-of-living crisis means it is already seeing levels of demand normally only seen during winter months.
Moriarty added: “Every single day at Citizens Advice we’re already helping people in the most heartbreaking circumstances, trying to scrape together enough to feed their kids and keep the lights on. This will get far, far worse unless the government acts.
“It’s becoming increasingly clear that skyrocketing prices will swallow up all of the help that has been announced so far.
“Every day that goes by without a plan is another day without reassurance for people who desperately need it. We urgently need further support, otherwise we risk a winter of despair for millions.”
With less than 10 days to go until Ofgem announces the next price cap increase, Utility Week editor James Wallin recently published an open letter to Conservative Party leadership contenders Liz Truss and Rishi Sunak, outlining how they can help consumers through the cost of living crisis.