UK government’s £400 energy bill support going unclaimed

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Government energy bill support worth as much as £400 over the winter is not reaching many households who use prepayment meters, according to data from a payments company.

Households with prepayment energy meters are entitled to vouchers giving them monthly discounts, but only half of the expected number have been used so far, according to PayPoint, which handles top-up payments in shops across the UK.

Discounts on energy bills were due to start on 1 October for everyone in the UK, regardless of the size of the household, with a reduction of £66 or £67 a month between October and March.

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Energy companies will apply the discounts automatically to bills for households who pay via monthly bills, but users of many prepayment meters, who are generally poorer, must actively claim the discounts.

PayPoint had expected to process 800,000 vouchers in October, worth a total of £52.8m. However, the business said only £27m had been redeemed, according to figures first reported by BBC News.

The Labour party said the government must end the “unfair penalty premium on prepayment meter users”.

Alan Whitehead, the shadow energy minister, said: “The government was warned countless times about the struggles of reaching prepayment meter customers through vouchers when this scheme was being designed. Yet they refused to heed these warnings and it comes as no surprise that millions of households have not yet redeemed support for their rising energy costs.

“Given that pre-payment meter customers are often on low incomes and at greater risk of fuel poverty, the government must urgently work with energy companies to raise awareness and promote take-up of the scheme before these vouchers run out.”

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Under the scheme, households with a traditional “non-smart” prepayment meter are meant to receive vouchers in the first week of each month by text, email or post. Customers should then be able to redeem these at post offices and PayPoint locations at corner shops and newsagents.

The government’s energy bills support scheme was announced by Rishi Sunak as chancellor in February and extended in May as the energy crisis worsened after Russia’s invasion of Ukraine. Liz Truss then announced a separate, broader promise to cap the average annual household energy bill at £2,500 a year for two years, although that was cut back to six months by the current chancellor, Jeremy Hunt.

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Energy companies insist on prepayment meters for customers who they think might be at risk of not paying. During the energy crisis, the number of prepayment meters being used has risen. Ofgem data analysed by the comparison site Uswitch shows that 7.38m prepayment meters were being used in the first quarter of 2022, up from 7.35m in the final three months of last year. Further increases in the number of prepayment meters are expected over the winter as bills rise, even after the government support is applied.

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Users of prepayment meters already pay more than many other households for the same service because of standing charges of as much as £50 a year that apply whether or not the household uses energy.

A spokesperson for the business department said: “The government has worked quickly to deliver the energy bills support scheme, helping a broad range of households struggling with energy bills this winter, including £1,200 direct payments being made to vulnerable households.

“We encourage customers to have their credit applied to their meter as soon as possible so that they can benefit from the scheme, which comes on top of the energy price guarantee which is saving the typical household about £700 this winter.”

This article was amended on 1 November 2022. An earlier version referred to 7.38m “homes” with prepayment meters, whereas this is the total number of such gas and electric meters in about 4.2m homes.

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