Social tariff for energy needed as squeeze becomes a debt crisis, charity says
Energy arrears should also be written off for those who can’t afford to pay, according to the charity StepChange.
More than half of the charity’s new clients are in energy arrears while a third of the charity’s clients do not have enough money each month to cover bills and essentials.
“For millions of people, the financial squeeze is rapidly becoming a debt crisis,” said Richard Lane of StepChange.
“They are at breaking point due to soaring utility bills, rising food costs, unaffordable rents or mortgages and stagnant wages.
“More than one in two new StepChange clients are now in energy arrears, many of whom aren’t eligible for further targeted support and are in danger of falling further into unsustainable debt.
“That’s why it is so vital that the Government urgently introduces a social tariff for energy which would act as a long-term solution to protect financially vulnerable households from debt and fuel poverty.”
For those already in difficulty, StepChange is calling on the UK Government and energy firms to prevent energy arrears building up further for struggling households, including targeted funding to write-off arrears for people who simply cannot afford to repay.
Lane said the extension of the Energy Price Guarantee, the end to extra pre-payment meter fees and the extra childcare support announced would make a “real difference” to struggling households but more support was still needed for families and those on the lowest incomes.
“It’s important that what the Government gives with one hand, it doesn’t take away with the other,” he said.
“Many of those now entitled to extra childcare funding will still experience unaffordable deductions from their benefits to repay debts, blunting the impact of extra support and still leaving them at risk of being pulled further into debt.
“StepChange has long called for the need to end these unaffordable deductions. The Government must act if it is to alleviate financial pressure on low-income households during the cost of living crisis and beyond.”
Stewart Hosie MP, SNP economy spokesperson, said UK Chancellor Jeremy Hunt had plunged more households deeper into poverty by removing the £400 energy support scheme payments.
Hosie said the “austerity” Budget would also have a profound effect on the Scottish Government’s Budget, forcing it to make “tough” decisions for the year ahead about how public services are funded.