One in three UK households not confident in being able to afford their energy bills

One in three UK households not confident in being able to afford their energy bills over the next year following energy price cap rise

• A third of UK households (34%) are not confident in being able to afford their energy bills over the next twelve months, after wholesale energy cost pressures caused the energy price cap to increase on 1^st January 2024
• One in four households found it difficult to afford their most recent household bills (25%) and say they would struggle to cope if energy bills rise in the next year (24%)
• Almost two in five households (39%) and over half of those with younger children (55%) are likely to take on additional debt to afford their everyday bills

 
Data from Compare the Market’s latest Household Financial Confidence Tracker has found that one in three (34%) UK households are not confident in being able to afford their energy bills over the next year following the increase to the energy price cap on 1^st January 2024. The energy price cap increased by £94 for a typical household at the start of the year from £1,834 to £1,928 per year, due to rising cost pressures on the wholesale energy market.

A quarter of households say they found it difficult to afford their most recent household bills (25%) and that they would struggle to cope if energy bills were to increase over the next twelve months (24%). On average, households who are not confident about being able to afford their energy bills say they would need £230 more per month to cover the rise in their energy bills.

Due to the rising cost of living, many UK households have been cutting back on other expenses to help them afford their bills. 50% say they have reduced the amount they are spending on eating out while four in ten have been spending less on clothes (42%) and leisure activities (39%). 38% say they have needed to cut back on holidays. Nearly a third (32%) of households say they currently feel more pessimistic about their finances compared to this time last year.

Some households say they may need to rely on credit to help them make ends meet. Almost two in five households (39%) say they are likely to take on additional debt, such as credit cards and loans, to afford their everyday bills. This is more common among families, with more than half of households with children under the age of 18 living at home (55%) likely to go into extra debt so they can pay their bills.

In response to the increased financial pressure, many UK households have been taking action to help them make savings. Two in three (66%) say they have shopped around on other household bills in order to save money to put towards their energy bills. For households with younger children living at home, this figure is even higher at 77%. In addition, more than half (55%) of households overall, and two thirds of those with young children (66%), say they have shopped around on their energy tariff to see if they can save money.

Nevertheless, many households say they are unaware of the various UK government programmes which aim to support those who may be struggling to afford their energy bills. Almost one quarter of households (24%) are unaware of the following government support schemes: the Winter Fuel Payment, Cold Weather Payments, and the Warm Home Discount Scheme. A quarter (25%) of households with children aged 18 and under living at home are not aware of these schemes. Out of the households who are aware of these three support schemes, just over half (55%) have heard of the Winter Fuel Payment, followed by Cold Weather Payments (49%), and then finally the Warm Home Discount Scheme (38%). To find out about eligibility for these three schemes, visit www.gov.uk.
 
Sajni Shah, Utilities Expert at Compare the Market, comments:
 
“It is concerning to see that so many households across the UK feel vulnerable to the prospect of further increases to their energy costs, with a substantial number expecting to go into debt or cut back on food shopping and leisure activities to afford their everyday bills. However, it is encouraging to see that many people are also taking action and shopping around on other household bills in order to offset energy cost increases.

“Switching your energy provider is a great way to save money, but with the market continuing to fluctuate, it is difficult to predict the future direction of 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, bear in mind that if prices fall, more competitive fixed deals may become available, or you could end up paying more than if you had stayed on a standard variable rate.

“It’s also a good idea for households to speak with their energy supplier or look into the various government schemes in place to check if they might be eligible to receive further support.”
 
Data sourced from 2,000 Nationally Representative UK Respondents (Aged 16+) between 20/12/2023 – 27/12/2023.