Cost Of Living Crisis UK Special Part 1
The so-called Cost Of Living Crisis is one factor that units many of us in these challenging and precarious times. Rising prices for food, petrol, energy and services, plus inadequate income, equals a pretty dire situation. I thought I’d put together a Frugal Finds Cost Of Living Crisis UK Special to look at what support the government is providing and other avenues you may wish to consider for saving money.
In this first part, we’ll look at current government schemes and explain the “energy price cap” that’s not really a cap, along with ways to save money on your energy and utilities.
Three Part Series Special :
- Part 1 – Government Help, Energy Price Cap Explained & Save Money On Your Energy
- Part 2 – Save Money On Your Healthcare & Prescription Costs
- Part 3 – Save On Groceries & Shopping
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Energy Bills Support Scheme – £400 Towards Energy
The Energy Bills Support scheme is the autumn 2022 discount of £400 for all households in Great Britain with a domestic electricity connection. However, as I’ve recently found out from our bill, this is NOT a lump sum payment. It is an automatic discount that is applied piecemeal across several months. It’ll be a £66 discount applied to your bill in October and November, then £67 applied to your bills each month from December 2022 to March 2023.
Everyone will get this monthly-basis discount, regardless of whether you pay monthly, use a payment card, have direct debit quarterly payments, etc. The one difference will be for traditional prepayment meter customers, who will receive vouchers from the first week of each month. These will be sent via post, text message or email.
All those with domestic electricity connections are eligible and don’t need to do anything as this should be automatically applied to your bills. Check your first discounted bill for October and speak with your supplier if you have any questions.
More information on the Energy Bills Support Scheme can be found here.
Cost Of Living Payments
The government under Boris Johnson set up a Cost Of Living Payment scheme to give payments to those deemed most in need. This includes :
- £650 in total for individuals on income-related benefits and/or tax credits.
- £150 disability payment for individuals in receipt of disability benefits (ie. PIP) that aren’t means tested.
- £300 for pensioners who receive winter fuel payments.
These payments are paid at different times. The £650 starts to be paid from July, the disability payment starts from September, and the pensioner payment starts in November 2022.
These payments will of course leave out many people. Even those that are eligible will likely find them to be a pittance that don’t touch the sides given the eye-watering price hikes. Pensioners have been left out and let down repeatedly, especially in terms of the conservatives axing the pension Triple Lock Promise that has stopped pensions increasing at the rate they they should this year.
Truss & Kwarteng Budget Changes
I imagine most people in the UK will be well aware of the furore surrounding the recent budget announcements from the new Prime Minister and chancellor. Liz Truss and Kwasi Kwarteng have reversed the National Insurance (NI) increase, but this is for all people and thus means those on much higher incomes will save far more money. They also removed the top 45p tax rate in the name of “growing the economy” while simultaneously making the rich that bit richer. On 3rd October 2022, this top-tier tax cut was U-turned due to uproar, though it appears it is only postponed for the time being.
There’s very little in the budget that is likely to help many working class or those unable to work, but the situation is continually evolving.
Benefits & Pensions Update
Unfortunately, the new Prime Minister and chancellor are yet to decide how to move forward with benefits and pensions. One proposal is to increase benefits in line with wages rather than inflation, which will be a much lower % increase. The concern is that the worst off and most vulnerable in society are facing a real time cut to their budget if income doesn’t rise in line with prices in the midst of this cost of living crisis. Confirmation of increases to benefits and pensions is still pending at the time of writing.
Be Mindful Of Scams
It sounds a little patronising to remind everyone to be mindful of scams, but as scammers get more sophisticated, more people are sadly falling into the well-placed traps. The government schemes will NOT involve anyone calling, emailing or texting you asking you to click on a link or to provide your personal details, and they will certainly not ask for your payment card.
If you receive communications, always check who it’s from (with caution, as spammers can appear to be from a genuine company when they’re not), whether it looks legit and what they’re wanting you to do. Err on the side of caution if you’re unsure. You should be able to find the company name or appropriate government contact information via a Google search, so get in touch with them directly to confirm the communication is genuine.
The Energy Price Cap (That’s NOT A Cap)
Upon becoming the new Prime Minister, Liz Truss set about capping the spiralling energy costs. The end result appears to be that typical households should now have to pay no more than £2,500 per year for their energy, which will be in place for two years, starting 1st October 2022. Prices are still going to be double or more than what many households were paying before and during the pandemic, but at least the cap may save typical households around £1,000 a year compared to the price they would have jumped to otherwise.
BUT this is NOT a ‘price cap’ per se. It is not Ofgem’s price cap, but it has been agreed with the energy suppliers. And here is the caveat – some homes will still end up paying far more than the “price guarantee” of £2,500 per year!
Why? Because this “guarantee” is only limiting the amount you can be charged by your supplier PER UNIT of gas or electric. Thus, the more you use the more you’ll pay. The £2,500 figure is just an estimate based on a 3 person household. And we’ve no idea if it’s really a typical home or a low-energy household operating in summer without using the heating. The real cost of energy will become known to bill payers over the coming months and because this “cap” has not been well explained, many people will be in for a nasty surprise.
The government notes that “Households who are unable to benefit from the full extent of the Energy Bills Support Scheme and/or Energy Price Guarantee scheme (for example, households not on standard gas / electricity contracts) will receive equivalent support.
More information on the energy bills support for households as well as for businesses can be found here.
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Save Money On Your Gas, Electric & Water
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Ways To Save Energy At Home
Most of the tips for saving energy are pretty common sense and have been trotted out a number of times on different platforms. They seem pretty insulting when you’re looking at price rises of more than 100% and people are having to choose between heating or eating. However, small changes can add up and there may be some things you could tweak to cut costs here and there. For instance :
- If you’re in need of new appliances, go for one with higher energy ratings (for instance, look for A or A+++ for the most energy-efficient).
- A full freezer will actually use less energy than a half empty one.
- Consider home insulation if you haven’t already, such as cavity wall insulation or loft insulation. There may be help available for this from your energy supplier.
- Wash clothes at a lower temperature and do more full laundry loads in your washing machine. Washing at 30 can save pennies and should be suitable for most, though not all, loads.
- Turn lamps, TVs, printers etc off at the wall where possible if they’re not in use. Leaving them on standby still uses electricity so if the product can safely be switched off at the wall, get into the habit of doing so when you’ve finished using it or before going bed each night. You could save around £65 a year by doing this.
- Your hot drink needs are becoming more costly, so only boil what you need in the kettle and don’t overfill it. Avoid pre-boiling if you can and only boil what you need when you need it.
- Use LED bulbs and avoid super cheap ones that get bad reviews as these won’t be cost effective if they only last a few months. LED bulbs should typically last for years and they use less energy than traditional bulbs. According to the Energy Saving Trust, using an LED bulb instead of a 100-watt incandescent one could save £15 per year on the one bulb alone, and you could save £6 a year on a 50-watt bulb swap. Add up all the bulbs in your home and that’s a decent saving.
- Reduce heat lost at home by draft-proofing windows and doors.
- When using the heating, turning down the thermostat by just one degree will save money. You could also consider turning down the flow temperature of your boiler.
- Review your utility bills to see if you could save by making small changes, including by paying direct debit or sending regular meter readings for accurate bills.
- Consider an air-fryer or worktop muti-function oven for regular use. Both options can be used for cooking various products and making meals in an eye-fryer typically takes less time than the oven. With these often using less energy overall than the oven and hob, you could save yourself time, energy and money.
- Contact your supplier(s) to let them know you’re struggling financially and ask if you’re on the cheapest tariff for your needs. You can also enquire about other support available.
- You could use a price comparison site to check costs with alternative suppliers but given the precarious situation with steep prices from all providers, you might not find the type of savings you need to make it worthwhile.
- Reduce use of your dishwasher by running a large full load instead of two or three partial loads. The same can be done with the washing or tumble drying.
- If your boiler is particularly old, it might be worth considering investing in a replacement boiler as newer versions are typically more energy efficient. It’s recommended you only do this if you boiler is very old or broken as the cost of a new one can run into the thousands. You could also check if you’re eligible for a Help To Heat grant. One element of this is a fund to help with the cost of boiler upgrades to encourage the installation of low carbon heating technologies.
- Bleed the radiators and turn off radiators in empty rooms. You don’t want to waste heat where it’s not required.
- Order a free water saving device for your shower, toilet, etc.
The government website also has a quiz with suggestions based on your home and usages for ways you could save.
Get Further Support From Your Energy Supplier
As noted above, you can contact your energy supplier to let them know things are tough financially and ask if you’re on the cheapest tariff and way of paying.
You can also ask what further help may be available. Many energy companies are now making additional support available, including grants, for their vulnerable customers and those struggling financially. I don’t think they’re necessarily contacting all customers to let them know such support is available which is really disappointing, so please do check online for further information and ask your supplier directly.
Also, as part of the Energy Company Obligation, companies should help those who need it the most by installing energy saving measures in their homes. There are certain requirements that need to be met and you can see if you’re eligible here.
Through this scheme, you may be eligible for help with the likes of cavity wall insulation or the replacement of an inefficient boiler. Some improvements may be offered for free, or you may be asked to pay towards them. You won’t pay for an assessment of your home and your needs, and you can always decline any improvements if there’s a cost involved that you’re not happy with. This scheme is through the energy companies themselves, it’s not a government scheme. If you’re not eligible or your supplier doesn’t offer the help you need, you could contact your local council authority to see if there are other avenues of support available.
Energy costs are going to be a big hurdle for many and there’s only so much you can do to manage your finances when your bill is sky-high. Please don’t struggle alone and do consider asking for help to see what may be available.
Do you think the government support is enough? Do you have any other tips for saving money on your utilities and energy bills?