Household energy: Britain on brink of affordability crisis

Britain is on the brink of an affordability crisis when it comes to household energy, according to new research by uSwitch.com, the independent price comparison and switching service. Almost a third of consumers (32%) say that energy is already unaffordable in the UK while 69% say that the Government has not struck the right balance between ‘greening' energy supplies and households being able to enjoy affordable energy.

The findings are a wake-up call to the Government, suggesting that many householders cannot afford any further increases to their energy bills and casting doubt over their ability to help foot the bill of the Government's ambitious carbon reduction plans.

The country faces a £200 billion investment programme which includes the cost of cutting carbon and switching to renewable generation. But already over a quarter of households (28%) are struggling to afford their energy bills after a year of hefty price increases which have seen the average household energy bill hit an eye watering £1,293 a year.

Many are already paying as much as they can afford leaving little or no capacity to absorb any further increases. In fact, six in ten households (62%) would struggle to afford an increase of as little as £30 a month. The same increase would see 63% of households forced to cut back on their energy use, adding to those who are already forced to self-ration.

Importantly, the research suggests that there is an ‘affordability ceiling' and the tipping point is when bills hit £1,500 a year. Almost six in ten people (59%) think that energy will become unaffordable in the UK if the average bill hits £1,500 a year. And the impact on households will be severe. Once bills breaks through this ceiling over three quarters of households (77%) will be rationing their energy use, 59% will be going without adequate heating and 36% will be forced to turn their heating off entirely.

Incredibly, the UK is only a small step away from seeing this. The average household energy bill would only need to go up by £207 or 14% for the country to hit the £1,500 ‘affordability ceiling'.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "This is a wake-up call and the clearest evidence yet that the UK is on the brink of an affordability crisis when it comes to household energy. We are now just £207 or 14% away from hitting an affordability ceiling after which consumers will start rationing their usage as though they are living in the third world.

"The facts speak for themselves: almost 7 million households living in fuel poverty, a third of people saying that energy is already unaffordable in the UK and over a quarter already struggling to afford their bills. And sadly that isn't the end of it - we are facing a £200 billion shopping list of investment required to secure our longer-term supply, cut carbon, boost energy efficiency and roll-out smart metering into all homes. Unfortunately for consumers, British households can expect to be footing the bill. I would urge the Government to calculate the full cost that will be passed onto household energy bills and to then think again about the impact on affordability in the UK."