Empowering the Freelance Economy

Price guarantee: think your energy bills can’t exceed £2500? You’re wrong

The energy price guarantee can only save you so much and can exceed £2500, says new report/ Photo by Patrycja Grobelny via Pexels
0 201

Almost two in five households (38%) wrongly believe that the Government’s energy price guarantee means their bills cannot go above £2,500[1], according to new research from Uswitch.com, the comparison and switching service. So to combat the confusion, we highlight in this report just how much you could end up paying and the top 10 ways households are cutting back to make ends meet.

  • Following the announcement, one in five (20%) feels confident about paying energy bills without adjusting their budget[2]
  • Over a third (36%) say they will need to make adjustments to keep up[2] and 37% are still anxious about how they will pay their energy bills this winter[2]
  • Two in five (39%) say they will spend less on non-essentials, including new clothes and streaming services, to cope with the rising cost of living[3]
  • A third (34%) of households will cut back on going out, and nearly a quarter (23%) will reduce the amount they pay into savings or their pension[3]
  • Uswitch.com offers advice on saving money across your household bills.

The measures announced by Prime Minister Liz Truss on September 8 will support people with their energy bills, and avoid the nightmare scenario of Ofgem’s price cap soaring to a planned £3,549.

Following the announcement, one in five (20%) say they feel confident about paying energy bills, and don’t think they will need to adjust their budgeting[2].

🔌 However, the announcement has caused confusion, with two in five households (38%) not understanding that the £2,500 figure is an illustration of an average household’s yearly bill, and not a fixed upper limit[1].

Taking into account the previously announced £400 energy bill support, households could still pay on average £237 more for energy over the three coldest months than they did last year[4].

A third (37%) of households still feel anxious that they will not be able to pay their energy bills this winter[2], while over a third (36%) say they will need to make adjustments to keep up.[2].

Two in five households (39%) say they will only cope with rising bills by cutting back on non-essential purchases[3].

A third (34%) of households will reduce the amount they spend on socialising, and nearly a quarter (23%) will reduce the amount they pay into savings or their pension[3].

Kids and young adults need to contribute to cutbacks, such as turning electrical devices off when not in use and sacrificing extras. Let them have some say on what they think they should cut back on so they feel more in control. Photo by Anton Porsche via Pexels

Top 10 ways households are addressing rising cost of living[3]

Change being madeHouseholds making a change
Cutting out non-essential purchases e.g. clothes, streaming services39%
Reducing spending on socialising, e.g. eating out, bars34%
Reducing savings/pension contributions23%
Taking a second/additional job8%
Using more of overdraft8%
Borrowing from friends and family6%
Taking a bank/personal loan5%
Moving out to live with other friends/family to share bills4%
Renting out some/all of my home3%
Spending the winter overseas3%

While the government’s measures are expected to support a lot of households through the winter, there is still a lot of confusion about what has been announced, said Ben Gallizzi, energy expert at Uswitch.com,

It is important to remember that the price guarantee of £2,500 is only an average bill — so you will pay more if you use more energy.

“It’s possible the announcement has created a false sense of security for some, especially for larger households who may pay significantly more this winter.

Ben Gallizzi, energy expert at Uswitch.com

“It’s really important that households track their energy and cut their usage where possible – as well as keep an eye on all household spending.

“At the moment you might not be able to save when it comes to your energy, but it’s still possible to cut costs across your other household bills.

“Reviewing your broadband, TV and mobile contracts, especially if you are out of contract, could be a quick and simple way to reduce your monthly outgoings. For example, broadband users whose deal has expired can save £162 a year by switching to a new package.”

Find out how to save on your household bills here.

Leave A Reply

Your email address will not be published.