Charities have urged the government to consult the sector when it reviews its six-month scheme intended to support businesses, charities and public sector organisations with their energy costs this winter.
Last Thursday, prime minister Liz Truss unveiled plans to ensure typical households will pay £2,500 on their energy bills each year until 2024.
The measure is expected to save a typical household £1,000 per year from October, when Ofgem’s £3,549 cap was set to be introduced, but is still above the current level of £1,971.
Truss also pledged to “support all businesses, charities and public sector organisations with their energy costs this winter – offering an equivalent guarantee for six months”.
She did not reveal any further details on the scheme but said the government will work with businesses and conduct a review “within three months” to determine where financial support is most needed.
Charities and sector bodies welcomed the cap but stressed that it does not go far enough to support the millions of people already struggling to pay their bills.
Meanwhile, fuel poverty charities called for further intervention to support the most vulnerable households.
Calls to include sector in review
Anna Fowlie, chief executive of the Scottish Council for Voluntary Organisations (SCVO), said that the six-month energy price guarantee is a “step forward for voluntary organisations whose energy bills have rocketed in recent months”.
But she added that “the length of the freeze fails to give organisations the certainty they need”.
“The cost-of-living crisis goes well beyond energy bills, with rising costs eroding available funding to deliver vital programmes and services.Thousands of voluntary organisations will need targeted support to cope with spiralling costs, particularly those opening their doors to provide food, warmth, and other lifeline support to people in need. There was no news of what additional support will be available.
“The promise of a three-month review to consider further support to vulnerable sectors must include voluntary organisations, a sector that was already in a vulnerable position before this crisis. More funding from the UK government to the Scottish government is essential to support voluntary organisations whose staff and services are being squeezed.
“We are concerned with the suggestion of households and organisations footing the bill for this energy price guarantee through their bills and taxes for years to come. This will have a damaging impact on charities already struggling to secure funding for day-to-day running costs before the running costs crisis.”
Richard Sagar, head of policy at Charity Finance Group, said that although the action from the government is welcome, both for the sector and consumers, six months “will not be long enough”.
“We await further guidance on the scheme to provide us with the confidence that this will work for the voluntary sector.”
NCVO: Pleased to see charities included in plan
Sarah Vibert, chief executive officer of NCVO, said that the cap will help relieve pressures on charities.
She added: “This announcement could also help people continue giving their time: our country relies on volunteers, and we were concerned that many people wouldn’t be able to continue because of the need to earn additional income.
“We are particularly glad to see the clear inclusion of charities and businesses in the energy price guarantee. We urge the government to quickly publish details about how the price guarantee will operate. As with furlough during covid-19, the initial six-month support will need reviewing as the winter progresses and we hope that financial support will be made available for as long as is needed.”
Charities already ‘feeling the squeeze’ on donations
Nicole Sykes, policy and communications director at Pro Bono Economics, said charities and the government must improve collaboration during those six months “to ensure policymakers have a full picture of the challenges for charities on the ground”.
“Charity incomes are already feeling the squeeze on donations as a result of the cost-of-living crisis. High energy prices will continue to step up demand for charity services, while increasing charities’ own costs – particularly in older buildings with less insulation, and facilities offering energy intensive services like hydrotherapy,” she said.
“In the longer-term, we need a strategy for inclusive growth and economic security, to build up our national resilience to future shocks, as well as a plan to improve insulation and finance that allows long-term investment in the charity sector.”
Tony Armstrong, chief executive officer of Locality, said: “As well as vital support for individuals, it’s good to see the government’s energy price freeze will include charities and other organisations – many of whom are supporting struggling families through the cost-of-living crisis every day with food, warm spaces and mental health support.
“Though it’s welcome that energy bills will now not rise to predicted levels this winter, they have already gone up a lot, and along with higher staffing, food and fuel bills, many organisations have already seen their overall costs doubling or trebling. This is threatening the survival of essential local services, and some are already being forced to close their doors.
“That’s why it’s crucial that community organisations at the front line are given additional targeted support as soon as possible. The longer they wait, the more vital local services will go to the wall, and the more people will be left without the help they desperately need this winter.”
Energy charities: Vulnerable households need ‘rescuing’ from current prices
National Energy Action (NEA), a fuel poverty charity, estimated that the freeze on energy bills could benefit over 24 million households and prevent two million households from ending up in fuel poverty.
“However, despite the good news, many households in serious fuel poverty need more than reassurance about future prices, they need rescuing from current prices,” said Adam Scorer, NEA’s chief executive.
“The new government must not forget that the most vulnerable need targeted support. Those who use more energy in their homes because of medical conditions, those who are elderly and those on very low incomes need extra help so they don’t have to ration their usage, putting their physical and mental health at risk. Those on prepayment meters must not be forgotten either. They would benefit from a lower rate or additional relief from huge standing charges.”
The Fuel Bank Foundation is currently seeing “peak winter levels of demand” for its services before the usual seasonal spike when people put their heating on.
Matt Cole, the foundation’s head, said that if demand continues to increase over the coming months, the charity “may be forced into a position of having to ration the support we provide”.
“For those already struggling to pay the current average fuel bill […], the new cap is still an increase for them,” he said.
“A more targeted package of support would have been more beneficial to those on low incomes or who are deemed vulnerable. These are the people who need it most.”
Simon Francis, the End of Fuel Poverty Coalition’s co-ordinator, said: “While many households will breathe a sigh of relief at the price cap freeze, the prime minister offered no detail of any additional support for the millions of households who will be left behind in fuel poverty this winter.
“Many of these people are struggling already and include those who are elderly, disabled or with pre-existing health conditions. Without more support to keep them warm this winter, the pressures on the NHS and social care system will increase. And without further investment in measures such as energy efficiency for those homes worst affected by fuel poverty, the plans will just be an expensive sticking plaster.”