Ofgem price cap reduction - what does it mean?

Comment from Ollie Gray, business development direct, Charis,

While Charis welcomes the reduction in the Ofgem price cap this July from £3280 to £2074, households will still be paying generally double what they were paying in 2021. The cumulative effect of the increase in the overall cost of living has meant that many people have been drawing on their savings or relying on credit to keep their heads above water.

Grants like the EBBS Energy Bill Support Scheme have been a lifeline for many people, but their financial resilience is crumbling. We may not see it for a few months yet - in fact there may be a false sense of security over the summer months. However, as the cooler autumn months arrive that illusion will quickly crumble - particularly if the Bank of England continues to increase interest rates to offset inflation. And while basic inflation has dropped, food price inflation is still in double figures, which adds further pressure to household budgets.

Until wages increase to meet the overall impact that the energy has had on the economy as a whole, millions of vulnerable households will need continued support and assistance in meeting their most basic of household bills. With no EBBS, the reduction is immediately absorbed, leaving no surplus income to build reserves or pay off bad debt.

According to Cornwall Insight, energy bills will not reduce to pre-2021 levels until the end of the decade. The financial damage that is being done to the economy in the long term is probably beyond the imagination of many for whom the struggle is simply to survive from pay check to pay check. It's no wonder that rates of anxiety and depression continue to reach record levels.

Charis is committed to ensuring charities, social housing providers and local authority organisations have a stable, robust and durable platform for distributing hardship funds in the most cost effective and efficient manner possible.

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