(Image: PA)
The Chancellor is being urged to provide support to Scottish households to help with soaring energy and heating oil costs when he unveils his Budget in the House of Commons next week.
Consumer Scotland is behind the call with the watchdog's chief executive Sam Ghibaldan writing to John Healey ahead of his plans being announced on Wednesday.
Mr Ghibaldan warned the Chancellor that 38% of households north of the Border cannot afford to heat their homes comfortably, with 19% falling into debt and arrears regarding their energy bills, according to research by Consumer Scotland carried out before the United States attacked Iran, placing further pressure on households heating costs.
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"In advance of your budget, I am writing to express Consumer Scotland’s concern about the continued pressure that rising energy costs are placing on households across Scotland and Great Britain.
"Targeted support may be needed to address this, alongside action to address the fast-growing problem of energy debt," Mr Ghibaldan told Mr Healey.
"Wholesale energy prices are lower than at the peak of the last energy crisis, but households continue to face bills that are substantially higher than before Russia invaded Ukraine.
"Many households are already struggling to afford the energy they need. Our latest annual energy affordability survey shows 38% of households in Scotland cannot afford to heat their home to a comfortable level, 16% find it difficult to keep up with their energy bills, and 19% are in debt and arrears.
"That research was carried out prior to the start of the conflict in the Middle East. Since then, the price cap has risen by 17% and according to the latest forecast from Cornwall Insight the typical household energy bill will rise to approximately £2,000 in January. This is bad news for consumers at a time when their finances are facing pressure on multiple fronts, including housing costs, food prices and other essential expenditure."
The Consumer Scotland boss said it should be "an urgent priority" for the government to identify ways to provide targeted financial support to those households that need it most this winter and that special attention should be given to those households with additional support needs that mean their consumption is higher than typical usage.
Chancellor John Healey will deliver his Budget next week. (Image: PA)
He added that around 170,000 Scottish households rely on heating oil or LPG to heat their homes noting that the UK government had already made funding available to support these consumers but pointing out in the context of current price forecasts and higher winter demand, further support may be required.
"We appreciate that in the time available before this winter, the suite of options open to government is likely to be limited," he stated.
"Any support required in the short term is therefore likely to be linked to the Warm Home Discount, though there could be opportunities to go further by providing additional support to households with specific needs.
"For example, in Scotland we are working with the Scottish Government to provide extra support to the terminally ill and exploring further support for households that have higher-than-typical energy usage due to medical needs."
Mr Ghibaldan said that in the longer term, work across the UK and Scottish governments and Ofgem is needed to improve the quality of energy affordability supports, and to tackle "the large and growing problem of energy debt and arrears".
He added: "The main current energy bill support, the Warm Home Discount, is flawed. It is cliff-edge in its eligibility, not tiered to reflect different levels of consumer need or higher essential energy use, and it is not indexed to energy prices.
"Therefore, although the overall funding is significant, the support is not always targeted at the right households, nor is it proportionate. Intensive work is needed to ensure government and industry-held data is used so that appropriate levels of support reach those who need it."
He went on to say that "concerted action" is required to tackle energy debt warning the cumulative impact of high prices in recent years has meant that total household energy debt is now £4.7 billion.
"This is a problem not just for indebted households, but for all consumers, as suppliers’ costs are ultimately passed through to all consumers via the price cap," he said.
"On average over £50 of a household’s annual energy bill now relates to debt, and this is likely to rise in the coming months as prices increase. This is unsustainable."
Mr Ghibaldan said that as an interim step to tackle the problem Consumer Scotland wanted the UK Government to approve Ofgem’s Debt Relief Scheme to provide targeted relief for some households.
"In addition, steps need to be taken to ensure that households that are in debt receive the advice they need, are put on credible repayment plans, and a wider preventive framework is put in place to ensure households stay out of debt," he added.
"We recognise the significant fiscal pressures facing government. However, if prices continue to rise, many households will face impossible choices this winter and it is incumbent on the government to prepare for different scenarios around energy costs.
"This means developing credible options to provide support on a targeted basis to households that are most under pressure, in the event that this is needed, which on current trends looks increasingly likely."
The UK Government was approached for comment.