Bleak Friday

As the cost-of-living crisis clobbers consumers, 1 April 2022 has been dubbed “Bleak Friday” – not to be confused with Black Friday; financial bargains are a distant memory as households struggle with rising bills across the country.

With the much-feared energy price cap rise kicking in today, we are witnessing the largest increase in gas and electricity costs in living memory. 

The 54% hike means the average household will now pay £1,971-a-year in energy bills – an unprecedented annual rise of £700. 

As Andrew Bailey, Governor of the Bank of England, said earlier this week, the country is facing the single biggest shock from energy prices since the 1970s.

To make matters worse, National Insurance contributions, water bills, car tax and council tax are also all scheduled to increase today. Inflation is already running at a 30-year high and food prices continue to soar, amid fertiliser shortages and dwindling grain exports from Russia and Ukraine (see Maggie Pagano and Tim Marshall‘s columns, below).

Costs are so high that the Resolution Foundation estimates the number of households in England in “fuel stress” has doubled overnight, from 2.5 to 5 million. 

Citizens Advice warns that millions of families will be making hard choices between heating their homes or eating. In March, before these latest increases, the organisation referred over 24,000 people to food banks or other charitable support, up 44% compared to the same month last year.

The price cap is designed to protect households from the volatility of wholesale energy prices. But with prices soaring to record levels over the past year, regulators have been forced to raise the cap to prevent energy providers from collapsing. 

There’s no sign that the price of wholesale gas will drop any time soon – especially now with sanctions on Russian energy. Another hefty rise in energy bills is likely when the cap is reviewed again in October.

Analysts predict that a further hike in the autumn will push the annual price to £2,600, meaning the average bill next winter would be double that of the winter just gone. This could leave one in four households across the UK unable to pay their energy bills, Citizens Advice warns. 

The government has insisted it is taking “decisive action” to help, by providing 28 million households with an upfront discount on their bills worth £200 – which can be paid back in installments. But the Labour Party – which wants to introduce a one-off windfall tax on the profits of oil and gas companies – has branded this response “pathetic”.

In the short term, what small measures can households take to counter the cost of living crunch? 

The UK has some of the least energy-efficient housing stock in Europe. Quick energy saving fixes include insulating any exposed hot-water pipes or draught proofing windows and doors.

The International Energy Agency has also reminded people that turning down thermostats by just 1°C saved households an average of £80 last year. 

As for the rising cost of fuel – drive slower! Reducing speed from 80mph to 70mph, for instance, uses 25 per cent less fuel. The Energy Transitions Commission has recommended that drivers should reduce speed on major roads to about 55mph.

Finally, make sure you are getting all of the support you’re entitled to. Pension credit, for instance, is something many Brits don’t realise they can claim. For those who need extra help for an illness or disability, another important benefit to consider is Personal Independent Payment.