The energy market has reached the boiling point. Small suppliers run the risk of being cremated by soaring gas prices and the country’s bills are on the verge of bursting.
Perhaps the only salvation in this sad saga is that the energy price cap works. Without them, the bills could have increased by as much as Â£ 500 for 15 million households.
Unfortunately, today’s guide to protecting your wallet from the flash of banknotes is just a damage control exercise. Today it is almost impossible to save money by changing energy tariffs.
Price increases: Without the energy cap, bills could have increased by as much as Â£ 500 for 15 million households
Still, there have long been worrying flaws in the industry. For years, minnow firms – sometimes based in apartment buildings – have been able to attract hundreds of thousands of customers by simply offering the cheapest deal on a comparison website.
Now these suppliers who buy energy on a daily basis cannot keep their promises. These small firms have been concerned for a while – as soon as the market shakes and wholesale prices rise, they crumble.
The nation’s healthy obsession with switching providers for the best deal accidentally created a monster, and we might soon be paying the price for it.
Competition is always good and small providers have helped change the energy market for the better. But the sector has been infiltrated by nonsensical companies offering stupid prices to make quick money.
It should no longer be up to taxpayers to save energy suppliers with terrible business models. The regulator Ofgem simply shouldn’t have allowed this to get out of hand.
The prospect now is that four million households will lose their supplier and struggle to reclaim all loans.
For now, we can only hope that the crisis will pass without causing severe financial distress and destroying competition in the market.
In the meantime, the government must step in and save us from what may be an unimaginably bad winter – as some people will not be able to afford a whopping increase in their bills.
We are already facing a harsh winter with the NHS under pressure and the coronavirus pandemic still threatening to wreak even more havoc. The last thing we need is more retirees getting sick because they don’t have the money to properly heat their homes.
It’s an exceptional situation, but the government should have been better prepared. As a nation, we have long marched blindfolded toward renewable energy without worrying enough about how to heat our homes when other supplies run out.
Ministers must act quickly to prevent poor households from having to choose between heating and eating this winter.
Whether it is to keep the universal loan hike of Â£ 20 or increase the winter fuel payment, something needs to be done.
We need an urgent solution to this crisis and a sensible long-term solution so that this never happens again. Things are hot for ministers and the energy regulator.
Held on account
A review of the Department for Work and Pensions (DWP) accounts today reveals that up to Â£ 128,000 were denied retirees due to mistakes made in 1985. Tragically, more than 40,000 people have come up short in recent years without receiving the state pension (and retirement) they deserve.
The report gives a depressing look at government inefficiency and oversight. The DWP staff weren’t trained enough to handle complex cases, and the computer systems weren’t up to the job either.
However, the audit also shows that even after the problem was identified at the beginning of last year, mistakes were still being made. The National Audit Office found errors in up to one in seven cases reviewed by employees.
And as we reported last week, there is now a huge backlog of secure new pension entitlements at DWP.
Without serious upheaval, the department is sure to make the same mistakes. It is a farce when we cannot trust the government with our pension payments.
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