Warning issued over 4 million UK households using pre-payment meters

The four million households who pay for energy via pre-payment meters (PPMs) are being overlooked, a leading poverty group has warned.

High prices and the concentration of energy use in the winter months mean most households with a PPM will need to spend more than 30 per cent of their income on energy costs during the winter months the Resolution Foundation claimed.

Resolution said families were sitting in cold, dark homes and are being overlooked when it comes to the Government’s decarbonisation plans, raising questions on the extent to which they will be able to reap the rewards of cheaper energy that the net zero transition is expected to deliver.

Resolution said bills are set to be more than £1,700 per yera in 2025 compared with just under £1,300 in late 2021 – and the position of some pensioners has deteriorated following the Government’s announcement to means test Winter Fuel Payments. 

Resolution said those on PPMs made up a quarter of the poorest fifth of English households. These household pre-pay for energy, compared with 1.5 per cent of the richest fifth – and in social and private renting households, where 38 and 18 per cent of families, respectively, are on PPMs, compared to just 2 per cent of owner occupiers.

This seasonal spike forces families to either spend a very high proportion of their income to keep themselves warm, or to endure cold living conditions that mean their health is compromised.

Pre-payment meter customers will need to spend nearly a third of income on energy during the winter months

The Resolution Foundation said pre payment meter customers often turned their heating for short periods of time, or only in some rooms, as a way of better managing credit levels.

It argued that heat pumps, which are expected to provide most home heating in a low carbon future, are inefficient when used in this way and therefore can cost more to run. Although PPM customers are not likely to feature prominently in the early rollout of heat pumps, these issues will need addressing to avoid them being the last consumers left connected to the gas grid. These are tricky subjects that we will examine in more detail in 2025.

So, while energy bills continue to dominate headlines, we need to spare a thought for vulnerable PPM customers who are set to face unsustainable pressures on budgets this winter and continuing struggles with high levels of debt. Looking ahead, more attention will need to be paid to how this group fares amid the race to net zero.