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The latest Deadline to Breadline report from Legal & General has found UK households’ financial resilience has shrunk by 21% since 2020 (from 24 days to 19 days)
People overestimate (by nearly six weeks – actually 41 days) how long they could fund basic living costs (such as housing costs, loans/ credit card repayments, utility bills and food) if they lost their income
Cutting back has become the norm but the 5 million poorest workers in the UK have no financial safety net in the event they lose their salary
On average, working households are only 19 days from the breadline, according to a report from Legal & General. The new research has shown that households have seen the amount of time they can fund basic expenses decrease by 21%, five days less than in April 2020.
Households have average savings of £2,431 and debts of £610. Accounting for average daily expenses of £93, this would see the average household run out of money in less than three weeks if they were to lose their income.
The research found that most people underestimate how long their money would last, assuming they would have 60 days of breathing room were they to lose their job.
With household costs increasing significantly, and more businesses under pressure, this has raised concerns that many people across the country could be especially vulnerable to financial shocks should the worst happen.
Household energy bills, for instance increased by 54% in April 2022, a record increase, and are likely to rise substantially again in October and the New Year. 2
Cutting back ‘the new norm’
While a quarter of households are yet to notice an impact from the increased cost of living, cutting back – on both essentials (69%) and luxuries (81%) – is the new norm. Even the majority of those with no debt and a higher income (over £50k annually) are being more cautious. 61% of those with a household income of over £50k are cutting back on essentials.
Nearly 2 million adults have no money left each month, a rise of 330,000 in the last 2 years. Concerns are particularly high for the UK’s poorest workers. Those earning under £20,000 a year – 5 million people in the UK – are living paypacket-to-paypacket and the average household in this group has no safety net should the worst happen.
Legal & General’s recent Rebuilding Britain Index also found that the cost of living crisis is increasing inequalities between different parts of the country, disproportionately affecting households in areas where there is a greater need for levelling-up initiatives.
Older workers most at risk of overconfidence
Older workers in the UK (55 to 65 years old) tend to have higher levels of financial reserves they can draw on, meeting their expenses for an average of 99 days in the event they lose their income. However, these households are also the most likely to overestimate their safety net, assuming they can manage for at least 180 days.
This raises concerns as older households have less time to build their savings back up before retirement and typically find it harder to find new roles following redundancy.
Bernie Hickman, CEO, Legal & General Retail, said:“Our latest research presents a challenging picture for working households across the UK. We often talk about managing money month-to-month but, as our findings indicate, for some it’s a case of day-by-day.
“The cost-of-living crisis is squeezing the purses of people all over the country, leaving households of every shape and size with money worries. The fact is there is only so much people can do to manage their budgets in these difficult times but there are resources available that can help.
“Half of all people in the UK (52%) haven’t taken advantage of financial guidance available, including free services like MoneyHelper, to help make the most of what they have.
“It may feel overwhelming but we encourage people to do what they can now so they are best prepared for a further squeeze on finances coming this autumn.”
Legal & General’s Deadline to Breadline report, published later this year, will explore the financial resilience, security and engagement of working households across the UK.
To help people better understand their money and make informed decisions, the insurance and retirement provider has put together a financial safety net content hub signposting tools and resources.
The months ahead are going to be tough, perhaps very tough (writes Prime Minister BORIS JOHNSON). Our energy bills are going to be eye-watering. For many of us, the cost of heating our homes is already frightening.
And yet I have never been more certain that we will come through this well – and that Britain will emerge stronger and more prosperous the other side.
Let us remember who caused this global surge in the cost of energy, and what is at stake.
Yes, we were already seeing supply chain pressures last year, caused by the aftershocks of Covid, and that was causing a rise in some global prices.
But by the end of last year we were fixing it. The world was finding the lorry drivers. The container ships were moving. We were sourcing the silicon chips.
What no one had bargained for was the decision of Vladimir Putin – and it was his decision alone – to launch a vicious and irrational attack, on February 24, against an innocent European country.
It was Putin’s barbaric invasion that spooked the energy markets.
It is Putin’s war that is costing British consumers. That is why your energy bill is doubling. I am afraid Putin knows it. He likes it. And he wants us to buckle.
He believes that soft European politicians will not have the stomach for the struggle – that this coming winter we will throw in the sponge, take off the sanctions and go begging for Russian oil and gas.
He believes we will tire of backing Ukraine and begin discreetly to encourage the Ukrainians to do a deal, however nauseating, with the tyrant in the Kremlin.
That would be utter madness. In this brutal arm-wrestle, the Ukrainian people can and will win. And so will Britain.
With every month that goes by Putin’s position grows weaker. His ability to bully and blackmail is diminishing. And Britain’s position will grow stronger.
We must and we will help people through the crisis. Colossal sums of taxpayers’ money are already committed to helping people pay their bills. That cash is flowing now – and will continue to flow in the months ahead.
Another chunk of the £650 is already due to go to the eight million most vulnerable households this autumn. There is another £300 going to pensioners in November, £150 for the disabled and £400 for all energy bill payers.
Next month – whoever takes over from me – the Government will announce another huge package of financial support. It is worth remembering why we are in a position to make these payments.
We have the cash to support families across the country because we have already proved the pessimists wrong.
I remember sitting in the Cabinet room for an economic briefing in 2020 as the waves of the pandemic broke over the world and we saw the biggest drop in output for 300 years. They told me UK unemployment would top 14 per cent.
They said that millions would be thrown on to the economic scrapheap – with all the consequent costs to the Exchequer.
They were wrong. After becoming the first country in the world to approve an effective vaccine, we staged the fastest vaccine roll-out in Europe, the fastest exit from Covid. As a result we had the fastest growth in the G7 last year and instead of mass unemployment we have about 640,000 MORE people in payrolled employment than before the pandemic began.
Instead of being at 14 per cent, unemployment is at 3.8 per cent, nearly the lowest for almost 50 years. That is giving us the fundamental economic strength to endure this crisis – as the Russian economy continues to melt down.
We are ending our dependency on Russian hydrocarbons. In June, for the first time in decades, we did not import any fuel from Russia. The UK has already stepped up production of domestic gas – 26 per cent more this year than last.
With every new windfarm we build offshore, with every new nuclear project we approve, we strengthen our strategic position. We become less vulnerable to the vagaries of the global gas price and less vulnerable to Putin’s pressure.
It is this Government that has reversed the apathy of decades and greenlighted new nuclear plants.
We are going to build a new reactor every year and will have a colossal 50 gigawatts of offshore wind by 2030 – almost half our total electricity consumption.
This British Energy Security Strategy is just a part of a vast programme to make the economy more productive and competitive.
In just three years we have increased the coverage of gigabit broadband from seven per cent of households to 70 per cent. We are strengthening the economic sinews of the country with the biggest investment in rail – three new high speed lines – for a century.
We have invested massively in skills, so that people can improve their qualifications throughout their lives.
We have taken decisive steps to make this the best place in the world to invest and start a business. We are axing dozens of burdensome EU laws – including Solvency 2 and MiFID, that acted as unnecessary deterrents to investment.
We are creating eight new free- ports, cutting taxes on investment and lengthening our lead as a science superpower – with £22billion of investment in science and a new Advanced Research agency to crack the big problems of our time, from dementia to zero carbon aviation.
All this is paying off in jobs and growth. In the first quarter of this year the UK attracted more venture capital investment in technology than China.
We have more tech investment than France, Germany and Israel combined and we produce a new billion pound “unicorn” company roughly every two weeks.
These new ideas are blooming not just in the golden triangle of Oxford, Cambridge and London but across the whole UK as we drive forward our levelling up agenda.
We have laid the foundations for long-term gains in prosperity and productivity. We know we will bounce back from the crisis in the cost of energy as we rapidly build up our own UK supplies.
That is why we will succeed and why we cannot flinch now.
If Putin is allowed to get away with his murder and mayhem, and to change the borders of Europe by force, then he will simply do it again, elsewhere on the periphery of the former Soviet Union.
Other countries will draw the lesson that violence and aggression can pay off and that will usher in a new cycle of political and economic instability.
That is why we must continue to back the Ukrainians – and their military success continues to be remarkable. Volodymyr Zelenskyy has shown his country is fundamentally unconquerable.
Now is the time for the West to double down our support, not to go wobbly.
We have more than enough resilience to get through tough months ahead. We have shown that before.
And we have made the long term decisions – including on domestic energy supply – to ensure that our bounceback can and should be remarkable and that our future will be golden.
Around 1.1 million claimant families receiving tax credits will get their first Cost of Living Payment from Friday 2 September 2022, HM Revenue and Customs (HMRC) has confirmed.
This £326 UK Government payment will be paid automatically into eligible tax credit-only customers’ bank accounts between 2 and 7 September 2022. The first HMRC payments will total around £360 million.
Nadhim Zahawi, Chancellor of the Exchequer, said:“I know people are really concerned by rising prices so I’m glad that over a million more low earners will shortly receive their first Cost of Living Payment. We are also preparing options for further support so the new Prime Minister can hit the ground running.
“Alongside £400 off most people’s energy bills, tax cuts and the Household Support Fund, these direct payments are a very important part of our £37 billion package of help for households, which is targeted at those who need it most.”
Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said:“This first Cost of Living Payment will provide vital financial support for eligible tax credit-only claimants across the UK. A second payment will be made to eligible customers from the winter.
“The money will be paid automatically into bank accounts, so people don’t need to do anything to get this extra help.”
These latest payments mean that more than eight million eligible households in receipt of a means-tested benefit will have received the first of two automatic Cost of Living payments of £326 from 14 July.
The second means-tested payment of £324 will be issued later this year – from the autumn for DWP benefit claimants, and from the winter for tax credit-only customers.
Tax credit claimants who also receive benefits from the Department for Work and Pensions will have already received their first Cost of Living Payment from July 2022.
The Cost of Living payments from the UK Government are part of a £37 billion package of support, which will see millions of low-income households receive at least £1,200 this year to help cover rising costs.
As well as the Cost of Living Payment, other UK Government support includes:
£400 discount from the government to help with the cost of energy bills from October onwards
£300 Pensioner Cost of Living Payment that will be paid alongside Winter Fuel Payments
£150 Disability Cost of Living Payment from 20 September for those receiving an eligible UK disability benefit.
This is all in addition to changes to the Universal Credit taper rate and work allowances worth £1,000 a year on average for 1.7 million working claimants; a rise in the National Living Wage to £9.50 an hour; and a tax cut for around 30 million workers through a rise in National Insurance contribution thresholds.
The UK Government is offering help for households. Customers should check GOV.UK to find out what cost of living support they could be eligible for.
Energy price hikes will cause ‘stress, anxiety, illness, debt and death’
Today (26 August) Ofgem has announced the energy price cap will increase to £3,549 per year for dual fuel for an average household from 1 October 2022.
This comes as Ofgem’s CEO warns of the hardship energy prices will cause this winter and urges the incoming Prime Minister and new cabinet to provide an additional and urgent response to continued surging energy prices.
The increase reflects the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the Covid pandemic and have been driven still higher to record levels by Russia slowly switching off gas supplies to Europe.
The price cap, as set out in law, puts a maximum per unit price on energy that reflects what it costs to buy energy on the wholesale market and supply it to our homes. It also sets a strict and modest profit rate that suppliers can make from domestic energy sales. However, unlike energy producers and extractors, most domestic suppliers are currently not making a profit.
The price cap protects against the so called ‘loyalty premium’ where customers who do not move suppliers or switch to better deals can end up paying far more than others. Ultimately, the price cap cannot be set below the true cost of buying and supplying energy to our homes and so the rising costs of energy are reflected in it.
Although Ofgem is not giving price cap projections for January because the market remains too volatile, the market for gas in Winter means that prices could get significantly worse through 2023.
Jonathan Brearley, CEO of Ofgem, said:“We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make. I talk to customers regularly and I know that today’s news will be very worrying for many.
“The price of energy has reached record levels driven by an aggressive economic act by the Russian state. They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.
“The Government support package is delivering help right now, but it’s clear the new Prime Minister will need to act further to tackle the impact of the price rises that are coming in October and next year.
“We are working with ministers, consumer groups and industry on a set of options for the incoming Prime Minister that will require urgent action. The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.”
Ofgem will continue to work with government, consumers groups, charities and suppliers, in supporting any new package of help or measures to ease the crisis.
Ofgem has also today strengthened the rules around direct debits to ensure suppliers set them at the right level, meaning that customers only pay exactly what they need to. The changes will stop suppliers from building up excessive customer credit balances and using them in a risky way as working capital.
Ofgem’s clear role is to protect consumers, and it has also today:
Strengthened requirements for suppliers to have sufficient control over the key assets they use to run their businesses. Together, this and the direct debit rule changes build on existing requirements to boost supplier resilience to better protect customers from costs associated with supplier failures.
Extended the Market Stabilisation Charge (MSC), which is paid by suppliers and helps protect customers from the cost of supplier failure.
Extended the ban on acquisition only tariffs which ensures all energy tariffs are available to existing as well as new customers, ensuring all consumers can get a fair deal on their energy.
Launched a review into the mechanism and level of profit margin available under the price cap to ensure that suppliers do not earn excessive profits and receive only a fair return for the services they provide to customers.
The new price cap level will take effect from 1 October 2022, but it is possible some suppliers may begin increasing direct debits before this date to spread costs. Customers worried about when their direct debit will increase should contact their supplier. Any money taken from customers to build up a credit will only ever be spent on their energy supply and customers can ask for their credit balance to be returned at any time.
Anyone worried about paying their bill should contact their supplier in the first instance. They are obliged to discuss payment plans and direct customers to government and third sector support where available. Ofgem is tightly monitoring suppliers’ performance in this area and has told all suppliers now is the time to step up their support for customers, especially those on low incomes or in a vulnerable situation.
Ofgem continues to monitor the impact of the price cap and to work with stakeholders and government on what more can be done for those least able to pay but most in need of energy.
When the new Prime Minister announces what additional support packages will be available, Ofgem will continue to examine how best it can help those groups of people that need it the most.
Reacting to today’s announcement by Ofgem, Poverty Alliance director Peter Kelly said: “The first moral duty of government is to protect people and provide them with security. The UK Government and Ofgem are failing badly in that duty and acting without any sense of compassion and justice.
“This massive price hike is in line with predictions. Ministers knew this was coming for months but have put nothing in place to prevent a humanitarian disaster.
“We must be clear. Bills of this size will be completely and utterly unaffordable for people on low incomes, many of whom have already been struggling with cuts to social security and huge wage squeeze for years and years. They will cause stress, anxiety, illness, debt and death.
“The UK Government must act now. It is simply not right that they continue to dither – prices must be frozen and targeted support must be put in place to help those most in need.”
Chancellor of the Exchequer, Nadhim Zahawi said:“I know the energy price cap announcement this morning will cause stress and anxiety for many people, but help is coming with £400 off energy bills for all, the second instalment of a £650 payment for vulnerable households, and £300 for all pensioners.
“While Putin is driving up energy prices in revenge for our support of Ukraine’s brave struggle for freedom, I am working flat out to develop options for further support. This will mean the incoming Prime Minister can hit the ground running and deliver support to those who need it most, as soon as possible.”
He later told the public to cut back their energy consumption – this from the man who once claimed parliamentary expenses for heating his stables!
This morning, Ofgem announced that the energy price cap will rise by 80%, taking typical household bills from £1,971 a year to £3,549 a year on 1 October.
People will rightly be worried by these huge price hikes. These eye-watering increases will simply be unaffordable for households up and down the country.
We’re demanding the government increase its support package for every household to at least £1,000, with extra support for the most financially vulnerable, or risk pushing millions of households into financial distress this winter. We also expect energy suppliers to ensure their customer service centres are adequately resourced to resolve queries quickly and help those struggling to pay their bills.
THE Government needs to spend £100 billion to freeze household energy prices for a year, according to an industry expert.Derek Lickorish, chairman of retailer Utilita Energy, told GB News: “Back in the banking crisis, Gordon Brown found £500 billion pounds to stop the banks falling apart and I’m advocating that we’re looking at about £100 billion to freeze prices for one year.
“At the moment, we don’t know what Liz Truss is bringing to the party and we don’t know whether it’s going to meet the size of the gap.
“While we have a price cap , when we get to the first of January, that figure is going to have a five in front of it, and it’s going to be another couple of thousand pounds and people cannot possibly afford to pay that amount of money for their energy bill.”
Speaking to Alastair Stewart on GB News, he added: “I think the area that needs to be looked at quite closely is the market structure, in terms of the way electricity is bought and sold, and I know there are plans to look at this now with some urgency.
“But you have a situation where you’re bringing on to the network power that has been effectively subsidised by the renewables obligation, yet they are getting these huge prices in terms of generation because the market price is set by gas.
“The wind doesn’t cost any more. The sun doesn’t cost any more. But these schemes are making an awful lot of money.
“To be fair, that’s about solutions that were brought in prior to 2017, so there was a change so that renewable projects from 2017 would get the price that they agreed.”
Asked to make a final point, Mr Lickorish said: “I want the Government to tell us what’s happening and it needs to be a very, very big number that we need to know now.
John Redwood MP, who has been tipped for a post in a new administration, suggested that VAT on energy will be scrapped for businesses when a new Prime Minister is in place.
“Cancelling VAT on fuel, at least temporarily while fuel costs are elevated, is a serious runner and any new government team will want to look at that,” he told Liam Halligan on GB News.
“I certainly agree with you that there are a lot of businesses under a lot of pressure and I think that must be part of a comprehensive package to explain to industry what help might become available.
“And what can be done about the excessive fuel bills that will directly now lead to some closures, as we’ve heard recently.”
Commenting on the energy price cap rise announced today, Crispin Truman, chief executive of CPRE, the countryside charity, said: ‘This winter’s energy bills are a ticking time bomb threatening to blow apart household finances.
“Rural areas, where wages are lower and homes often cost more to heat, will be devastated if the full force of the price rises are felt by consumers. The government must step in to prevent those living in the countryside from having to choose between eating and heating this winter.
‘We’ve been here before in the pandemic – the country is entering a national crisis that requires an emergency response. Ministers must urgently put in place direct financial support to get people through the winter, while working to deliver the only viable long term solution – improving the energy efficiency of our homes.
‘In addition to stratospheric energy bills, the cost of living crisis is being driven by a lack of housing and soaring rents for millions in the private rented sector. Homelessness is rising as half a million people languish on social housing waiting lists. In the Eden district of Cumbria, homelessness rates are more than four times what they were in early 2020.
‘Twiddling with taxes won’t cut it. To ease the cost of living crisis the government needs to provide immediate monetary support. To prevent a generation of rolling winter crises, we need to get off gas and rapidly invest in home insulation and cheap renewable energy. A longer term fix must also include providing many more social and affordable homes.’
National charity, Family Fund,has welcomed the Government’s one-off £150 cost-of-living payment for 6 million disabled adults and children from September, but warns more support will be needed given today’s uplift of the Energy Price Cap.
Cheryl Ward, Family Fund Chief Executive, said: “We know that current severe inflationary pressures are affecting millions of people across the land, but for families caring for disabled and seriously ill children, who have even greater costs, the outlook is very grave. The choices between putting food on the table, paying for energy or clothing and sensory equipment are stark”.
Family Fund, the UK’s largest grant-making charity for families with disabled or seriously ill children and young people, acknowledges that the much-needed Government cash will go some way to ease the burden of bills, as the cost of living soars, but that more support will be needed in the coming months.
The charity provides essential items for families on the lowest incomes, including kitchen appliances, clothing, bedding, play equipment and much-needed family breaks.
Parents and carers raising a disabled or seriously child can face costs some three times higher than for other families. A grant from the charity can make all the difference for parents; helping to relieve their everyday stresses by providing essentials needed to care for their children.
“We very much welcome this latest £150 payment from Government”, said Cheryl Ward, “but we know from the increasing calls we are now getting from our families, facing spiralling costs on every front, that more support will be needed. We are therefore, along with other charities, asking ministers to consider urgently how future support can be given.”
In recent research, three quarters of families supported by Family Fund say their financial situation has worsened significantly since the pandemic.
Even before today’s Energy Price Cap uplift, two thirds of families with disabled children are struggling to pay energy bills and nearly one quarter say they are already falling behind with bills.
The cost of living crisis is, therefore, hitting many who are already in an extremely financially vulnerable position.
£1.2 million to ensure households and businesses get support
Immediate funding is being awarded to key energy advice organisations to make sure energy customers can access crucial support and advice to deal with rising energy bills and heating costs.
More than £1.2 million will be distributed to help key agencies, including Advice Direct Scotland, Home Energy Scotland and Citizen’s Advice Scotland, reach more people who need help.
The funding will also support a training programme for staff from third sector organisations to expand the reach of expert advice.
The Scottish Government committed to providing additional support to advice agencies at the Scottish Energy Summit hosted by the First Minister on Tuesday 23 August, at which a series of further actions to mitigate the energy price rises were agreed with energy companies and advice organisations.
The additional funding announced today is on top of the Scottish Government’s existing investment in free income, welfare and debt advice services, including support to Money Advice Scotland and the Welfare Advice and Health Partnerships Programme.
Minister for Zero Carbon Buildings and Tenants Rights Patrick Harvie visited Home Energy Scotland’s Edinburgh offices to speak to advisors who have been supporting households.
Mr Harvie said: “We know that this is an incredibly unsettling time for all households and businesses and it is imperative that those worried about or struggling with heating their homes access the information and support they need to reduce their energy bills.
“A further energy price cap increase announcement will only serve to escalate concerns, making the need for impartial, expert advice and support even more vital.
“The Scottish Government is clear that energy customers simply cannot be expected to carry the burden of further price rises in October, and that the UK Government must now commit to freeze the cap for all households and to support energy companies to deliver that.
“In the meantime, the cost crisis is already hitting energy customers hard and the Scottish Government will continue to do everything within our means to support the people of Scotland through it.
“This funding will ensure that expert advisors across the country stand ready to provide crucial support and guidance to those understandably worried about their energy bills. I would urge everyone who has concerns to access these services and get the support they need.”
A total of £1.268 million will be distributed across energy advice services as follows:
£220,000 to Advice Direct Scotland to fund new staff in its contact centres for consumers, including vulnerable consumers, in need of help.
£50,000 to Advice Direct Scotland to create a user-friendly online digital journey for customers
£220,000 to Citizen’s Advice Scotland to enhance capacity in their local advice bureaus enabling them to provide advice on both energy debt and energy efficiency measures.
£280,000 to expand the Home Energy Scotland advice Service
£198,000 for Home Energy Scotland recruits who will provide training to staff from third sector organisations on energy efficiency, which will see around 200 local community groups and organisations benefit
£300,000 to enhance support for businesses through Business Energy Scotland
The Scottish Government estimates that 906,000 or 36% of all households will be in fuel poverty in October 2022, based on an Ofgem price cap of £2,800 and taking into account previously announced government mitigations.
The Scottish Government has allocated almost £3 billion in this financial year that will help households face the increased cost of living. This includes the provision of services and financial support not available elsewhere in the UK that is helping to reduce everyday costs and increase incomes.
It also includes £10 million to continue the Fuel Insecurity Fund which helps households at risk of severely rationing their energy use, or self-disconnecting entirely. This includes direct support for households using any tariff or fuel type, and is delivered via trusted third sector partners the Fuel Bank Foundation, Advice Direct Scotland and the Scottish Federation of Housing Associations.
Aldi supported charities in Edinburgh during the school summer holidays by donating more than 8,800 meals to people in need.
The supermarket paired its stores up with local charities, foodbanks and community groups via community giving platform Neighbourly to donate surplus food to good causes.
Since the partnership with Neighbourly began in 2019, Aldi’s UK stores have already donated more than 25 million meals to over 3,600 local causes.
Liz Fox, Corporate Responsibility Director at Aldi UK,said: “Our food donations scheme with Neighbourly operates year-round, but we know that school holidays are a particularly hard time for families, especially as many continue to experience greater hardship due to the cost-of-living crisis.
“This is why we committed to supporting even more amazing causes in Edinburgh over the school holidays, helping them to provide meals to those who needed them most.”
Steve Butterworth, from Neighbourly, added:“School holidays are often a time when demand on charities and foodbanks drastically increases, particularly during summer when children are at home for six weeks or more.
“This push in donations from Aldi was therefore essential in helping these organisations support families during this time.”
The Scottish Government, energy companies and advice organisations met at Bute House yesterday (Tuesday 23rd August) for a summit chaired by First Minister Nicola Sturgeon – but it’s the UK Government that will have to act to head off a financial crisis for families across the country.
During the meeting a consensus emerged around next steps that must be taken by the UK Government, and where further work and action will take place between energy companies, advice organisations and the Scottish Government ahead of a follow up meeting next month.
The First Minister said: “Any further increase in energy bills in October will have a profound impact on households, businesses and the public sector already struggling with the cost crisis.
“No single government, company or organisation can solve this crisis alone. It requires a collective response commensurate to the situation and the Scottish Government is now treating this situation as a public emergency.
“There was clear consensus at today’s summit that energy customers simply cannot be expected to carry the burden of further price rises in October, and that the UK Government must now commit to freeze the cap for all households and to support the energy companies to deliver that.
“This meeting was focussed on practical solutions, but without action by the UK Government to address the problem at source, the actions we discussed can only ever mitigate the impact of such dramatic price rises at the edges.
“I am grateful to energy suppliers and our third sector partners for coming to the table today and for committing to work together with the Scottish Government to develop further action and practical steps to help households and businesses through the cost crisis.”
The consensus reached in the meeting was that the UK government should:
Immediately cancel any further energy price increase for domestic consumers, and work with the regulator and energy companies to put in place the funding to support this;
Provide significant additional support to help households and businesses meet current energy bills and the impact of inflation more generally;
Take action to protect small and medium sizes businesses, and other organisations not covered by the price cap, from rising energy costs;
Reform the energy market for the longer term to prevent this situation occurring again in the future.
The following actions to mitigate the current situation were also agreed and will be developed further:
Energy companies will pursue all possible options to provide enhanced support to consumers who are in difficulty, including working with advice agencies and government to improve the support available to consumers, and protect customers from disconnection. It was agreed that the energy companies will work with the Scottish government over the next two weeks to agree a package of measures;
The Scottish Government will provide additional support to advice agencies and consider, as part of its emergency budget review, further support for households and businesses. It will also undertake a public information campaign to promote energy efficiency measures alongside sources of help and support for those in difficulty;
This group will reconvene following the announcement by Ofgem of the new price cap on Friday 26th August and the appointment of a new Prime Minister to determine further specific actions.
The Chancellor is in Edinburgh today to showcase the support the UK Government is providing the people of Scotland through a £37bn package.
It comes after July’s National Insurance Contribution threshold rise for workers across Scotland, putting £330 back into the pockets of a typical employee this year and saving households over £260m.
The Chancellor will also be meeting leaders of Scotland’s green energy industry, emphasising our drive to improve Britain’s energy security.
The Chancellor will today reaffirm the UK Government commitment to help the people of Scotland with rising costs in the coming months, as it continues to deliver its £37bn package of support.
On a visit to Edinburgh, Nadhim Zahawi will also emphasise the UK Government’s commitment to energy security and making sure we have the green supplies of power we need for the future.
He will be meeting some of the figures who have led Scotland to the cutting edge of green power generation technology, as well as apprentices starting out in the industry. His visit will take in one of Scotland’s leading companies in the field of tidal energy as well a windfarm capable of providing power to up to 11,000 homes.
This comes in the same week that Chancellor began a series of meetings with energy generation companies as part of ongoing discussions on what more the industry can do to ensure markets function effectively for consumers.
The visit comes as the UK government is providing 689,000 households in Scotland with the £650 cost of living payment as well as £400 to help people with their energy bills, from October, over the winter months. It has also committed an extra £82 million for the Scottish Government to help vulnerable families at their discretion – in addition to the significant income tax and welfare powers they already have.
The UK Government has also launched the Review of Electricity Markets Arrangement to address higher energy costs, the need to boost energy security and the need to move the UK to a cleaner energy system as well as the Energy Security Bill, the most ambitious piece of legislation in the sector for more than a decade.
Zahawi is also sitting down with the leaders of Scotland’s financial services industry, which employs thousands of people in Scotland. He will listen to their concerns and emphasise the UK Government’s commitment to the sector.
The Chancellor will also meet performers from the world-famous Royal Edinburgh Military Tattoo.
Chancellor of the Exchequer, Nadhim Zahawi, said: “I know families across Scotland are feeling anxious about rising costs and the UK Government has stepped in to ease pressures on household budgets.
“We delivered an unprecedented level of support in July with a National Insurance cut that will put £330 back into workers’ pockets this year, while many of Scotland’s most vulnerable households have already received the first instalment of a £650 Cost of Living Payment.
“And there’s more to come. Not only will the second instalment of that payment arrive this autumn, but I’ve been clear that we are absolutely committed to bringing an equivalent to the £400 energy bills discount to Northern Ireland as soon as possible to ease the burden on families.
“We will continue to help support families in Northern Ireland through the global pressures we are all facing.”
The UK Government has provided a record £41 billion annual settlement for the next three years and we will continue to work collaboratively with them.
