Skip to main content

Cost of energy bills ‘will soon exceed mortgages’

First Utility research shows energy bills could hit £3,761 per year by 2025

first utility logoThe annual cost of energy bills will soon exceed the amount that people pay towards their mortgage, according to energy supplier First Utility, which argues that the government’s continuing investment in green energy is pushing bills ever higher.

Ian McCaig, chief executive of First Utility, said that the coalition’s policies on windfarms and energy efficiency schemes are adding to the rising cost of energy bills and will continue to do so for the next decade, by which time the average household’s outgoings on utilities will exceed their mortgage payments.

Things will only get… worse

“If things continue as they are, or even get worse, for some consumers in some parts of the country we will see energy bills overtake many other bills we have traditionally thought were the biggest items of non-discretionary spend,” he told the Telegraph.

Research carried out by First Utility shows that the average dual fuel bill in the UK has risen by 8.5% a year over the last five years, to stand at £1,420. If this rate continues, energy bills will stand at £3,761 a year by 2025, which is higher than the amount people pay towards their mortgage each year in Stoke-on-Trent.

Meanwhile, the cost of energy bills is set to exceed mortgage payments in Liverpool by 2029, and in Norwich and Birmingham by 2030.

Course of action

To help avoid this scenario, Mr McCaig has proposed the government reviews its environmental policies and that consumers also do their bit by thinking about how to use less energy.

By simply turning the heating down – or off, when it is not required – people will notice a huge difference in the amount of household income that goes out on energy bills, he said.

“People use heating really inefficiently. When did we all start thinking it was alright to walk around our houses in the middle of winter with our shorts and T-shirts on? When did that become a sensible activity?”

Mr McCaig said First Utility will instead use consumption data to help customers use less and save up to 20% on their current energy outgoings; freeing up funds to spend on other essentials and boost their quality of life.

Ifs, Buts and Maybes

Only last week, John Constable, director of the Renewable Energy Foundation, estimated that the cost to the nation’s energy customers in green energy subsidies will pass £16 billion a year within the next seven years, and may result in the first decline in living standards since the Industrial Revolution.

According to Mr McCaig, this reality can be averted, but is is a “big ask”, and relies on the government’s flagship Green Deal proving a success.

The initiative – which sees consumers provided with government grants to fund energy efficient home improvements, which are then paid back through future energy bills – has been lauded by the coalition as a means of alleviating the rising cost of utility bills.

However, Mr McCaig said the interest rate for the Green Deal is “pretty high” and suggested that alternative schemes may be required to ensure customers are getting a fair deal.

Ultimately, a combination of governmental policy and consumer action is going to dictate how much energy bills rise by, he concluded.

“Bills are going up and there’s a bunch of stuff that can be done at a macro level to mitigate the impact of that. But, at the end, consumers are going to have to focus on the fact that maybe behaviours are going to have to change.”

Learn more

Move to renewables ‘will add £200 a year to energy bills’

First official numbers on Green Deal released

  • Sylvina

    Why suggest that high energy bills are down to questionable consumer behaviour like keeping their houses tropically warm in winter? Why not recognise that in many parts of the country, specifically those that are off the gas grid, people pay a fortune just to keep the house at a tolerable and healthy temperature? These are the people who suffer. We can’t access dual fuel discounts, we are beholden to the fluctuating price of oil or, worse, we suffer the electricity price hikes without any recognition that this is not merely powering our X box but is in fact heating our home in the depths of winter. Please let’s start recognising the real, not the imagined, hardship caused by energy prices.

    • Daniel Cross

      Get people to realize that they can buy the energy companies! STOP being a consumer, START being owners! or merely self sufficient, which is difficult in urban areas.