Home energy costs have risen five times faster than income

The cost of household energy has risen more than five times faster than household incomes since 2004, according to a study.

The average household’s annual energy bill of £1,252 now accounts, for example, for 11 per cent of a couple’s basic state pension of £11,175 a year, according to the research.

The study by price comparison website uSwitch.com found the cost of energy is the top household worry for Britons. Nine out of ten householders say it worries them, whereas the rising cost of food worries 70 per cent and mortgage payments 42 per cent.

Almost a third of consumers (32 per cent) responding to the poll say household energy is “unaffordable” in the UK.

Last week Centrica, which owns British Gas, warned customers of a 15 per cent rise in wholesale gas prices.

Other companies are expected to announce rises in the weeks to come. But as electricity and gas bills continue to rise, the average income has not increased to match.

While the average UK household income has increased by 20 per cent from £32,812 in 2004 to £39,468 today, the average energy bill has risen by 140 per cent, according to uSwitch’s figures.

Households were spending an average of £522 a year for their energy in 2004, but now pay £1,252 a year – 3.2 per cent of their income or double the 1.6 per cent of eight years ago. The study found 83 per cent of people believe that rising energy bills have had an impact on their disposable income.

Some 17 per cent of those report that they no longer have any disposable income as a result, and 27 per cent say energy bills have reduced their disposable income dramatically.

Ann Robinson, director of consumer policy at uSwitch.com, said: “This is the cold reality facing households today; in less than ten years our energy bills have rocketed by 140 per cent. The breakneck speed at which energy prices have sprinted upwards has caught many people unawares. Consumers are still playing catch-up.

“Energy now accounts for a significant slice of household income which is why the numbers rationing their energy use have risen so steeply in recent years.”

Labour’s shadow energy minister, Tom Greatrex, said: “Hard-pressed families and pensioners the length and breadth of Scotland are really feeling the squeeze from sky-high energy bills. It is unfair that so much of household income is being used to cover energy bills.

“Energy companies are quick enough to put up their prices when wholesale costs go up, but are slow to bring them back down again when costs are reduced.

“Rather than stand on the sidelines, the government should be reforming the energy market to make it work in the best interests of consumers.”

Research by consumer association Which? shows 60 per cent of people taking out payday loans do so to pay for household essentials.