In a week when Scottish Power announced 19% price rises comes a report that says the poorest pensioners cut down on food spending to afford heating costs. Have you had to give up on eating to heat your house?
At Which? we’re always looking for the most timely opportunities to tell people about our research. So we reckon the Institute for Fiscal Studies (IFS) must have been pretty pleased when Scottish Power decided to announce a massive hike in the price of energy the day before the IFS published a damning report on the effects of fuel poverty on pensioners.
Included in the respected think tank’s study was the literally chilling figure that, during cold spells, the poorest pensioners cut their food spending by 7% in order to heat their homes.
I’ve heard anecdotes about this ‘heat or eat’ dilemma before, but this is the first time I’ve seen hard statistical evidence of the problem. It should send a clear message to Ofgem and the government about the way the energy market works in this country.
Energy market fails consumers
At this very moment Ofgem happens to be ploughing its way through the responses to its latest investigation into why the energy market is failing consumers.
One of the regulator’s big findings was that up to 60% of people have never switched their supplier – and that vulnerable consumers, like the poorest pensioners, are more likely to be in this group of non-switchers than the average person.
An equally important finding was that switching your supplier for the first time could save you up to £250 a year – easily enough to mean never having to face the awful choice of keeping warm or going hungry.
Choosing the cheapest energy tariff
So why do those who stand to gain the most from switching their supplier not bother? Well, Ofgem reckons that many are put off by just how complex choosing an energy tariff can be – seven in ten people say they find this confusing. At the last count there were over 300 available – an increase of 70% in the last three years.
And it’s not just the number, there’s also a baffling array of ‘components’ – standing charges, tiers of different price rates, discounts, cashback offers, exit fees, and so on – to navigate. Price comparison sites – like Which? Switch – are really the only way to work out which is the cheapest, but only one in five of us use these to search the market.
Oh, and you need to have internet access too – something that would hardly be high on my list of priorities if I had to regularly choose between the boiler and the food cupboard.
In our response to Ofgem’s investigation we’ve told the regulator it needs to make sure tariffs are easy for people to understand and compare at a glance. This means doing away with tiered pricing and complicated discount structures. Only then will pensioners not have to choose between ‘heat and eat’.
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