Written Statement: Cost of Living – Energy Crisis

As we reach the start of spring, after another challenging winter for many, I remain extremely concerned at the state of the energy market and its effect on the people of Wales, especially those using prepayment meters. The cost-of-living crisis is continuing to have a devastating impact, particularly on low-income households.

I had been calling on the Chancellor to use the opportunity in his Spring budget not to increase the Energy Price Guarantee to £3,000. Although I welcome the announcement it will remain at £2,500 until July for a typical household, it is disappointing the Energy Bill Support Scheme payment of £400, a lifeline for vulnerable households, is ending in April.

This means a typical household will be paying £400 more for their energy from April and will leave many vulnerable people in Wales struggling to afford their energy bills.

In Wales, energy bills are higher due to the age of the housing stock and extremely high standing charges.

The existing prepayment meter rules, intended to protect the most vulnerable in our society, are clearly not working as intended. It is of paramount importance the most vulnerable are protected and championed by Government in these hugely challenging economic times.  I therefore welcome the decision to bring prepayment energy charges in line with customers who pay by direct debit in the budget. The ‘prepayment penalty’ was manifestly unfair, but a further injustice is the standing charges prepayment customers face and I have called for their removal. There is still work to do. I have called on UK Government to ensure that all the benefits and support, such as cheaper rates, available to those on standard credit energy meters are also available to those on prepayment meters.

Most recently I wrote to Grant Shapps, Secretary of State for the Department for Energy, Security and Net Zero on 13 March, calling once more for the removal of prepayment meters. I also called on UK Government to follow the example set by the water industry where companies are prohibited by law from disconnecting or restricting water supplies to households who owe them money. I have also called on them to introduce a social tariff and ensure magistrates’ courts permanently end bulk approving warrants.

Whilst it is regrettable it took a media investigation to highlight the issue of forced installation of pre-payment meters, I was pleased to see the end of the practice, albeit temporarily. I have been calling for this ban to be extended and am pleased Jonathan Brearley, Ofgem’s Chief Executive announced on 14 March the ban is being extended beyond the end of March and will lift “only when and if” firms follow Ofgem’s new code of practice. I am meeting Mr Brearley again at the end of March.

I have been consistently clear – householders who have been subject to forced use of a prepayment meter, either through the wholly flawed warrant process or because they were encouraged to do so, perhaps not appreciating alternatives available to them, must be offered the opportunity to revert their meter, at no cost.

I also met Catherine Brown, Chair of the Enforcement Conduct Board (ECB) in mid-February, fully supporting the Board’s calls for debt collectors employed by energy supplier to be accredited by the ECB. This is a matter I have raised with both UK Government and Ofgem and will raise with energy suppliers when I meet with them again at the end of March.

There is still much to do – the UK Government and Ofgem hold significant levers to implement improvements for many households across Wales.

The Welsh Government remains committed to supporting low-income households through the crisis. £1.2m has been given to credit unions in 2022-23 to expand their lending, supporting the ethically driven credit union sector to serve new members who are financially vulnerable due to having poor credit histories. This is in addition to the £500k per annum given to the sector to promote their growth and expansion across Wales, raising awareness of their work to promote financial inclusion. Welsh Government remains committed to working with the sector given the significant risk that people who are struggling to make ends meet and who cannot access mainstream forms of credit will, in desperation, turn to high-cost lenders or illegal lenders. 

An extra £18.8m has been secured for the Discretionary Assistance Fund, increasing the total DAF budget for 23/24 to £38.5m. This increase will bring the budget for 23/24 in line with the existing levels of demand on the fund, allowing us to continue to support financially vulnerable people in Wales at a time when some individuals are struggling to meet the most basic of living costs such as food and fuel. This means that from 1st April 2023, we will move to one set of rules for all Emergency Assistance Payments (EAP), allowing equity of access to the DAF. We will also be uplifting each EAP award by 11%. This will mean that all individuals can apply for an EAP up to three times in a rolling twelve-month period, with just a seven-day gap between applications. This will enable us to provide higher value payments to individuals over a shorter period of time in order to support them during a time of crisis.

The Welsh Government remains committed to helping households to maximise their income. In December we launched our latest campaign ‘Here to Help with the Cost of Living’ to reassure people that help, and support is available for households across Wales who ae struggling to pay their bills. The campaigns awareness raising messages are being delivered through all channels, including TV, radio, and press advertising, social media and a direct mailout to households. Our previous two Claim What’s Yours campaigns encouraged over 8,000 people to contact Advicelink Cymru where they were helped to claim over £2.7m of additional income.