With energy prices confirmed to skyrocket again for millions from 1 October, a campaign group is calling on people to boycott paying their energy bill.
Following a 54% increase in the energy price cap that came into effect in April, and another 80% hike confirmed for October, families are understandably anxious over how much their energy bills will cost.
Campaign group Don’t Pay UK is urging households to cancel their energy direct debits in protest when their energy bills go up. But while it might sound like a good idea, it is important that you are aware of the legal and financial risks involved if you don’t pay your energy bills.
Gary Rycroft, a solicitor at Joseph A. Jones & Co, says: “I understand the sentiment of the campaign - there is a massive problem heading our way - but as a lawyer I want people to make an informed choice and Don’t Pay UK are not explaining the legal and financial implications for individuals. And there are implications for your credit score - which in turn will affect your ability to rent, remortgage or take out a credit card in the future.”
What is Don't Pay UK's plan?
Don't Pay UK is encouraging households to boycott paying their energy bills should the predicted steep rise come into effect. It hopes that this mass non-payment of energy bills will force the government to intervene and reduce energy prices.
It says: "We are demanding a reduction of energy bills to an affordable level. Our leverage is that we will gather a million people to pledge not to pay if the government goes ahead with another massive hike on October 1st."
The planned action will only take place if at least one million people pledge to cancel their direct debits. So far, the group has the support of around 90,000 people.
But if you are thinking of cancelling your direct debit come 1 October, it is important that you understand the risks involved and what it could mean for your families finances down the line.
What happens if I refuse to pay my energy bill?
If you decide not to pay your energy bill (or if you are struggling to make the payments), your energy supplier must, first of all, give you a chance to pay it via a payment plan. However, if you don’t agree to a payment plan, your energy supplier may install a prepayment meter in your home. Your energy supplier can go to court to obtain a warrant to enter your home to do this. Alternatively, if you have a smart meter, this could be remotely switched to a prepayment meter. This means you will have to pay for your energy before you use it, by buying credit - similarly to a pay as you go mobile phone.
Your energy supplier can also pass on your details to a debt collection agency to get what they are owed. If you continue to refuse to pay your bill, your energy supplier can then take you to court to get a county court judgement (CCJ). This means a court has ruled that you have to pay the money you owe.
All of the above will have an effect on your credit score. When you fail to make an energy bill payment a default will stay on your credit file for six years, according to credit agency Experian.
A default seriously impacts your ability to borrow money in the future. When you apply for a credit card, to remortgage or take out a personal loan, the lender will check your credit score to decide if you’re likely to pay them back. A default shows you are high risk. This may result in you being refused the credit altogether, or means you have to pay higher interest rates on the money you are allowed to borrow.
A poor credit score will also affect you if you are looking to rent or take out a mobile phone contract.
What should I do if I can’t pay my energy bill?
If you are struggling to afford your energy bill, contact your energy supplier about a payment plan: 116,000 people have already done so in the first six months of this year, according to Citizens Advice. Many firms have hardship funds too.
Solicitor Gary Rycroft strongly suggests talking to your energy firm: “It has a duty to help you if you are struggling. It would be better for people to overwhelm energy firms with requests for help, that way they will go to the government to ask for help themselves.”
Check to see if you qualify for help with your energy bills, including benefits like the warm home discount, winter fuel payment or a fuel voucher.
Reach out to a budgeting or debt charity such as Citizens Advice Bureau, Christians Against Poverty and Step Change for assistance.
There will also be a £400 energy rebate for almost all households in Britain which will be paid from October. Rumoured plans for an energy bill freeze are also being reported but are yet to be confirmed.
