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A quarter of households spend more than 10% of their income on energy bills

13 January 2014

Despite this over a third are still on their providers’ expensive standard tariffs

Over a quarter (28%) of people who are customers of the nation’s six largest energy companies spend more than 10% of their monthly disposable income on energy, research has revealed.

Gocompare.com, the comparison website, commissioned the survey of over 2,000 adults who are currently customers of the UK’s big six energy suppliers – British Gas, E.ON, npower, EDF, ScottishPower and SSE – and found that people’s reluctance to switch providers could be costing them dear.

While most people spend under 10% of their monthly income on their energy bills (32% spend between 1% and 5%, and 36% spend between 5% and 10%), the research revealed that many households desperately need to cut their energy bills. And for the 6% of people who spend more than 20% of their monthly income on energy costs, the situation is particularly urgent.

But despite this apparent huge overspend on gas and electricity, many people have been with the same supplier for several years, often languishing on their providers’ standard tariffs and therefore potentially paying much more for their gas and electricity than they need to be.

One in five (19%) of those surveyed said they have been with their big six supplier for one to two years; one in three (34%) haven’t switched for between two and five years; and almost another third (30%) have been with their current provider for more than five years. And for the over 65s this figure is even higher, with 39% of people in this age group admitting to having been with the same big six energy company for five years or more.

And with more than a third (36%) saying that they are on their energy supplier’s standard tariff, and a further 30% admitting they didn’t know if they were or not, millions of people are likely to be on the most expensive tariffs.

Jeremy Cryer, Gocompare.com’s energy spokesperson, said: “It’s shocking to think that so many people could be paying out up to a fifth of their after-tax earnings just to keep their heating and lighting on. And with winter’s price rises now all having taken effect, this situation is unlikely to improve unless the government and the regulator build on the work they’ve done so far, and unless people take action themselves and switch to better tariffs.

“An energy provider’s standard tariff is usually the very worst option, and the fact that over a third of those that we surveyed admitted to being on such a deal indicates that many people need to shop around and switch. This is particularly true for the 30% of people who have remained loyal to their provider for five years or more. Loyalty really isn’t rewarded when it comes to gas and electricity tariffs but, on the plus side, these energy customers could stand to make big savings if they act now and switch, and could even cut their annual bill by more than £300*.

“Ofgem’s proposed reforms to the energy market that are due to take effect in spring and summer of this year, and which include energy companies having to regularly notify their customers of the cheapest tariff they can offer, and moving customers from expensive ‘dead tariffs’ to cheaper ones, will hopefully go some way towards ensuring people aren’t on very expensive tariffs unnecessarily.

“However, it’s important to remember that energy companies will only be telling their customers about their own cheapest tariffs, not the cheapest tariffs on the whole market, so people should never assume that everything will be automatically be handled for them and must take time to regularly compare the tariffs available, from suppliers big and small, to find the best deal for them. It’s the same gas and electricity whoever you buy it from after all, so vote with your wallet.”

-ends-

Notes to editors:

Based on research commissioned by Gocompare.com and carried out by Consumer Intelligence on 13 and 14 December 2013 with 2,016 UK adults who are customers of the ‘big six’ energy suppliers (British Gas, ScottishPower, E.ON, npower, EDF, and SSE).

Region, age and gender breakdowns of the survey results are also available.

*Based on customers who switched energy supplier for both gas and electricity (dual fuel) using the Energylinx powered Gocompare.com platforms during the 1st July - 30th September 2013. At least 10% of people who switched energy supplier for both gas & electricity with Gocompare.com saved £309.05 or more