Cost of household energy grows five times faster than income
New research from uSwitch.com reveals that the rise in the cost of household energy has significantly outpaced the growth in household incomes since 2004. While household incomes in the UK have increased by 20%, from £32,812 in 2004 to £39,468 today, the average household energy bill has shot up by an eye-watering 140%. This means that energy bills have increased more than five times faster than income.
In 2004, households were spending £522 a year on average for their energy. Today the average household energy bill is a crippling £1,252 a year. In 2004, energy accounted for 1.6% of household income - today this has doubled to 3.2%.
Although the basic state pension has increased by 35% since 2004 to £11,175 a year for a couple living together, this hasn't been enough to stave off the effects of rampantly increasing fuel bills. The average household energy bill today would eat up a tenth (11%) of their income.
As a result of the alarming pace that energy prices have been accelerating by, almost a third of consumers (32%) say that household energy is unaffordable in the UK. The cost of energy is now the top household worry for Brits (90%), ahead of the rising cost of food (77%) and even mortgage payments (42%), while the number of households rationing their energy use has grown year-on-year. This winter over eight in ten people (83%) cut down or rationed their energy use because of cost - a 7% increase on 2011 and 14% higher than in 2010.
The elevated cost of living over the past few years has eaten away at consumers' wallets. On average, Brits have just £297 of disposable income left per month after all essential household bills are paid. In fact, eight out of ten people (83%) believe that the rising cost of energy bills has had an impact on their disposable income. Of these, nearly a fifth (17%) say that they no longer have any disposable income as a result and more than one in four (27%) say energy bills have reduced their disposable income dramatically.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "This is the cold reality facing households today - in less than ten years our energy bills have rocketed by 140%. The break-neck speed at which energy prices have sprinted upwards has caught many people unawares. Consumers are still playing catch-up.
"Energy now accounts for a significant slice of household income which is why the numbers rationing their energy use have risen so steeply in recent years. But going cold or without is a short-term and potentially harmful fix and not a long-term solution. The fact is that consumers can control how much they spend on energy by making their homes more energy efficient and paying less for the energy they do use by moving to a competitively priced energy plan. Those who are on a low income or benefits could even benefit from free insulation from their energy supplier so it's always worth contacting them first to see what financial help you can get."