Four in ten households not confident on energy bill affordability

Almost four in ten (39%) households with children at home are not confident that they will be able to afford their energy bills over the next six months, according to Compare the Market’s latest Household Financial Confidence Tracker. This compares with just below one fifth (18%) of those households without children at home.

Concern over energy affordability comes despite the majority of customers seeing a reduction in their energy bills following the price cap falling to £2,074 on 1st July. Families with children said that, on average, they would need an additional £391 each month to be able to afford their energy bills in the coming months. Over one in ten (16%) said they would need between £250 and £499 each month to be able to meet the higher costs.

In line with falling prices and the recent price cap change, some energy providers are beginning to offer a limited number of fixed rate deals, with more expected as prices are anticipated to fall further. While the fall in the price cap offers some initial relief, bills remain at historic highs. As such, one third (33%) of households with children at home would consider fixing their energy tariff now rather than staying on the default standard variable tariff (SVT).

The research found that over two fifths (41%) of households with children believe they are likely to take on additional debt to help them afford everyday bills. Families with children are also cutting back on a range of everyday costs to cope with rising prices, such as reducing their spending on food shopping (46%) and spending money on clothes (62%).

Ursula Gibbs, director at Compare the Market, said “The fact that so many households are unsure if they will be able to afford their energy bills, despite changes to the energy price cap, speaks to the significant challenges facing families due to the cost-of-living crisis. While it’s good to see competition is starting to return to the fixed tariff energy market, the current market environment remains challenging, and we can’t predict the direction of future prices.”

“For households who can afford it and want the security of knowing exactly how much they will pay for energy each month, the current fixed tariffs available could be a useful and cost-effective option. However, if prices fall further, you could end up paying more than if you had stayed on a standard variable rate.”

“It’s therefore important that, when switching services return and the market becomes more competitive, households compare prices online and decide carefully which deal is right for them. Switching to a cheaper provider though is one of the best ways that households can ensure they are getting the most value for money.”