The record energy price cap increase of £139 in October is set to push two in five families into debt with their supplier, according to the latest Household Financial Confidence Tracker from comparethemarket.com.
43% of families with children at home believe that if energy bills increase it will push them into debt with their energy provider – more than double the number (20%) of people without children.
Annual energy costs need only rise by an average of £76 to tip households with children at home into financial difficulty. Yet Ofgem’s new price cap level is set to rise by £139 annually for millions of households. For the 23% of families with children on a Standard Variable Tariff, and the 17% on a prepayment meter, the price cap increase could cause significant financial difficulty.
As many as one in six (16%) families with children at home report being in arrears to their energy provider, or have been, in the last twelve months. One in three (32%) are not currently in debt but are worried they will soon fall into arrears – this is a concerning figure, due to potential cold weather increasing energy usage and the ongoing gas crisis. By contrast, 19% of people without children at home are concerned about energy debt.
More than one in five (22%) families with children at home said they had struggled to pay their bills over the last week. In addition, 23% of families with children at home do not feel confident in their ability to meet their financial obligations over the coming weeks – compared to (14%) of people without children in the house who said they were worried about paying their household bills.
Ursula Gibbs, director at comparethemarket.com, said “Rising energy costs are understandably a massive cause for concern for millions of households across the UK, and even more so for families with children at home. The current energy crisis is sadly showing no signs of ending. The price cap increase is a concern for many and millions of households are facing a significant increase to their outgoings as a result, which will unfortunately push many into debt with their supplier.”
“The energy crisis has left customers with few options to reduce costs, with little to no tariffs to switch to that present value for money. With winter approaching, a time when usage tends to increase, people are worried that the additional cost will push them into the red. For those concerned about the impact of rising usage on costs, comparethemarket.com offers a number of tips here that people can follow, from saving electricity by turning your TV off to bleeding radiators. People facing financial difficulty should speak to their supplier to see what support is available, and can also find out if they are eligible for the Government’s Warm Homes Discount scheme.”