A very real and personal financial crisis
It will have been impossible to have missed the media coverage on the energy crisis that the UK is facing. It is clear that the vast majority of UK citizens will face a very real and personal financial crisis in the coming months.
Earlier this month The New Statesman published an article on the impending crisis that invoked our nations love of the staple hot drink that has become such an integral part of our culture:
I’m not cutting down on cups of tea: the Brits refusing to pay their energy bills.
The NewStatesman.
To pay or not to pay that is the question
The rise in energy costs is eye watering and, despite some intervention by the government, it is clear that our utility bills will present an uncomfortable financial challenge for most and a real challenge on the ability to pay for many.
I’m going to avoid the question of energy companies profits, the case for nationalisation and whether (or not) the response by the UK government is appropriate and focus on one aspect of the energy crisis by misusing a Shakespeare quote: “to pay or not to pay that is the question”.
You have almost certainly heard about the emergence of a movement seeking to build a mass non-payment strike of energy bills with a target grouping of one million people.
You will also be aware that central to this movement is a call to cancel the Direct Debits that we have set up to pay our energy bills.
Just cancelling a Direct Debit is not an act of empowered direct action
Whilst cancelling a Direct Debit might feel like an act of empowered direct action it is anything but because the supply of gas and electric to your property has an underlying supply contract. This means that cancelling the payment method only represents indirect action and you’ll still owe money for energy you have already and will consume in the future.
Whatever your views on energy prices are a campaign to ‘not pay’ is irresponsible, the only outcome is an unpaid energy debt that will lead to even worse outcomes for exactly the people that a campaign may propose to support.
Whilst I haven’t got an answer to reversing the excessive energy bills we are facing I urge you not to cancel your Direct Debit thinking that you have taken sufficient direct action that will protect you from the financial consequences to your bank account.
Cancelling your Direct Debit and taking no further action will have serious long term consequences for you and your household.
Whether you are struggling to pay or object to having to pay
Whether you are struggling to pay your energy bill and or you object to the eye watering bills you receive there are some things that you can do:
Do what you can to reduce your energy consumption - the internet is awash with helpful energy saving ideas.
Talk to your energy supplier(s).
If you cancel your Direct Debit decide how you will pay for the energy you consume - perhaps with a debit card, by setting up a Standing Order or by making a bank transfer1.
You can cancel a Direct Debit at any time by contacting your bank or building society to notify them of the Direct Debit you want to cancel, it is also important that you notify the organisation concerned.
Do remember that cancelling a Direct Debit simply stops payments from going to the organisation you are paying. It doesn’t affect the underlying contract you may have with energy company so, if you carry on receiving the service, then you will have to organise an alternative payment method.
And above all:
Consider the consequences - if you choose not to pay for the energy you consume how will you deal with the debt recovery process that you will be subject to? Will you end up with the installation of a mandatory pre-payment meter that will ultimately be more expensive? What will happen if your energy supply is cut off?
The Citizens Advice Bureau are clear on consequences:
Your energy supplier can move you on to a prepayment meter or, in rare cases, even disconnect you.
Direct Debit cancellation could lead to a household being moved on to a more costly tariff, while longer-term arrears could result in the involvement of a debt collector or eventually a county court judgment.Gillian Cooper, head of energy policy at Citizens Advice Bureau.
Do, talk, decide and consider
As you consider what action you might take when the energy bill lands on your doormat (or more likely in your inbox) remember that the Direct Debit mandate only covers the payment method and not the underlying contract for the supply of energy.
So remember do, talk, decide and consider:
Do what you can to reduce your energy consumption.
Talk to your energy supplier(s).
If you cancel your Direct Debit decide how you will pay for the energy you consume.
Consider the consequences of your actions.
Watch out for the energy scammers
And finally, (unfortunately) ones person challenge often is a fraudsters “opportunity”.
There’s been an increase in scams posing as Ofgem, as criminals take advantage of the rise in energy prices. They will appear as apparently genuine emails or text messages claiming to offer discounts on energy bills, or information on how to claim your government discount.
Remember the government discount will be automatically applied, and you won’t need to share any personal information or bank details.
Find out more about how the government's Energy Bills Support Scheme will work here.
Two things to look out for
Remember to take extra care when you receive an email or text about your energy bills (or any aspects of your financial life for that matter).
Here’s what to look out for if you suspect it might be a scam:
Links to fake Ofgem websites that ask you to provide personal details and provide your bank details to receive the money.
Fake websites including variants of: energy-bill-online, myenergybillonline, rebate-ogem and totalsolutions24-7.
What to do
If you are contacted, stop and review the content of the message you have received:
Checkout the excellent Take Five - To Stop Fraud website for advice.
Contact the organisation directly - use contact details from a known source not the details in the message you have received.
Don’t provide any personal information by email or text.
If you are unsure about the email forward it to report@phishing.gov.uk
If you are unsure about a text forward it to 7726.
Help grow Payments:Unpacked’s audience
If you found this newsletter helpful please share across your network:
And lobby your energy provider, your bank and regulator (Ofgem) to adopt new payment solutions such as Request to Pay. Intrigued? Visit Answer Pay for more on Request to Pay - the new way to pay.