Martin Lewis is right: the cost of living emergency is already here
For a guy on holiday with his family, Martin Lewis looked and sounded anything but relaxed.
The Money Saving Expert founder (and closest thing Britain has to a patron saint of personal finance) usually adheres to a self-imposed media embargo for two weeks every summer, but broke it following shock predictions that average energy bills in the UK could exceed £5,000 next year.
Staring down the barrel of the camera, Lewis warned this was a “national crisis on the scale of the pandemic”, urging Britain’s “zombie government” to wake up and increase state support now or risk leaving “millions destitute and in danger this winter”.
Lewis cares. Why? Because he can foresee exactly how bad this could get.
A lightning rod for the tens of millions of consumers who subscribe to his weekly money saving email and follow him on social media, Lewis has a deep insight into the nation’s financial state of being. Politicians should ignore this at their peril.
When energy regulator Ofgem announces the October price cap on August 26, it will be open season for energy companies to demand customers pay even higher direct debits. For many, monthly energy bills stand to be higher than their mortgage or rent.
Ofgem says its recent upward adjustments to the price cap will prevent more energy companies going bust. But what about people going bankrupt? Lewis grimly predicts civil unrest.
There’s been a surge of support for the Don’t Pay campaign. Supporters intend to cancel energy payments in protest (this will wreck their credit scores, but campaigners see no viable alternative).
I’m a regular pundit on LBC Radio with Eddie Mair. Callers we speak to cannot understand the Westminster bubble’s continued ignorance of the financial ruin people and small businesses now face.
At first, it was people with delivery jobs priced out of work by the increases in petrol and diesel. Others spoke of giving up jobs they were passionate about because the money was slightly better stacking supermarket shelves. But in recent weeks, the cost of gas and electricity has been the primary cause of anguish.
We have heard from a mother of three who can only afford to eat her children’s leftovers. The dad of a newborn who runs his own business and is staring at bills he knows he has no means of paying. A Dundee shop owner who is not sleeping because his energy bills are about to quadruple to £53,000.
The one that tipped me over the edge was a man who described how he was working two jobs — one day shift and one night shift, six days a week (and sleeping on Saturdays) yet this was still not enough to provide for his family.
“The sense of bleakness stays with you,” says Mair. “The listeners who are suffering do not convey anger. I sense weariness; embarrassment at being unable to cope; despair.”
For now, the only hope people can cling on to is that something will be done, eventually, but there is scant evidence of government planning to head off the “financial cataclysm” that Lewis and others predict. By contrast, fuel poverty charities are already in disaster planning mode. Christians Against Poverty handed out nearly triple the amount of emergency energy top-up vouchers in July as it did last year, and the Fuel Bank Foundation is also experiencing record demand.
They know the double whammy of winter price cap rises will tip more households into “deficit budgets” — where their income is unable to cover basic outgoings of rent, fuel and food — and the impact is being felt by people higher and higher up the income scale.
Energy debts are rising and providers simply don’t have the resources to speak to every affected customer and agree a repayment plan. Unless pandemic-style mass solutions are found, more customers face being switched over to expensive prepayment meters (if you have a smart meter, energy companies can do this without having to enter your home). Lack the cash to top up? You will literally be left sitting in the dark.
In an indication of the expected scale of the fallout, several charities are working up plans to create “warm spaces” in community buildings across the UK for people who can no longer afford to heat or even cook in their homes.
The government’s existing support package will give every household an energy rebate of £400, regardless of income, to get through the winter months. If you can afford to donate yours to help fund the frontline work of fuel poverty charities, I would urge you to do so.
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