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More than one-third of Scots now say household bills are ‘unaffordable’

Nearly three in four Scotland are worried about unaffordable energy bills in 2022 with many admitting to cutting back on food to cope, according to new research.

A YouGov survey found 70 per cent of people in Scotland were worried about bills becoming less affordable by November 2022. More than one in five were very worried.

Some 36% of people already find their bills unaffordable.

And 54% of these people said they would cut back on household spending, with 56% of these people specifically reducing grocery spending.

Others have stopped eating out or ordering takeout to be able to afford their steep energy bills. Meanwhile, others have taken to driving less to save money on petrol, and even canceling holidays and trips.

Citizens Advice Scotland has described the energy market to be in a “crisis”, with multiple suppliers leaving the market and increases to the energy price cap.

The figures come after a year of challenges in the energy market for consumers in 2021, with the price cap increasing twice, and multiple suppliers exiting the market.

The energy price cap is set to be lifted again in April, and could mean another record rise in bills for consumers.

The energy industry has warned that household gas and electricity bills could rise as much as 50 per cent in the spring as the UK faces a “national crisis” over soaring wholesale prices.

The trade body Energy UK has called on the UK government to intervene to help cut the cost of bills amid predictions that the price cap could easily exceed £2,000 a year.

The UK’s price cap on energy bills which stops companies from immediately passing rising costs on to their customers is due to change on April 1 when the industry regulator Ofgem is set to raise the cap dramatically.

While energy wholesale prices continue to climb steeply, the UK’s price cap on energy bills stops companies from immediately passing those costs on to their customers.

Since 1 October, the price cap, set by the industry regulator, Ofgem, has been set at a record £1,277.

In Scotland some 1.5m Scots householders saw their energy bills soar by up to £139 after the last price cap hike.

Households that use a default energy tariff to buy their gas and electricity received the sharp increase.

HeraldScotland:

The sharp 12% rise was driven by a surge of more than 50% in wholesale fuel costs with gas prices hitting a record high as global economies recover from the COVID-19 crisis, according to Ofgem.

Citizens Advice Scotland which commissioned the latest research while launching the Big Energy Saving Winter, a campaign encouraging people to get advice to manage rising energy bills.

The research carried out in November asked over 1000 Scots if they were worried about energy bills becoming less affordable in the next 12 months. Just 20% said the were not very worried and a further five percent said they were not at all worried, while four percent said they didn’t know and one percent preferred not to say.

CAS fair markets spokesman Kate Morrison said: “After a challenging year for consumers in 2021 when it comes to energy costs, people are bracing themselves for a tough year in 2022.

“People have already had two difficult price rises in the past twelve months, and all the evidence points to further record rises this coming year. That, added to rising inflation more generally, will see some people really struggle.

“It’s also important to note that people are worried about bills becoming more unaffordable – so that doesn’t just mean higher bills but more challenging household budgets generally, from rising prices in the shops to falling or stagnant incomes.”

Monday Jan 3: EXC SCOTLAND’S council tax debt mountain has risen to record levels, increasing sharply by nearly 50% in a year as concerns grow of a credit crisis during the coronavirus pandemic.

Official figures seen by the Herald show that in 2020/21 the amount of council tax that remained outstanding amounted to £139.552m on March 31, 2021.

Last year, before the pandemic hit, the council tax debt stood at £95.4m – a rise of nearly 25% on the previous year.

The amount currently owed in council tax which has led to tens of thousands of households being pursued is believed to have impacted by the economic effects of the Covid-19 pandemic as councils limited debt recovery processes to avoid contributing to financial pressure on council taxpayers.

Councils have reported that repayment arrangements have been put in place, in many instances over a longer period of time.

In some cases council tax payers have arrangements moving into the current year with tax recovery continuing.

But Citizens Advice Scotland now fear council tax debt could grow even further in 2022 as the economic effects of furlough ending, rising prices in the shops, reductions to Universal Credit and soaring energy prices hit hard.

They say that will lead to tightening finances for more people putting extreme pressure on household decision-making around which bills to pay, including council tax.

Council tax debt is currently the number one debt issue the Citizens Advice Bureau network sees.

Analysis of figures for 2020/21 reveals that 1,422 people sought help from the Citizens Advice network with a complex debt issue involving council tax, owing a cumulative £4.1 million in council tax arrears.

CAS say “worryingly” the average debt owed was £2,925.84 – almost three times the average council tax bill of £1,198.

Figures for the first two quarters of 2021/22 show this figure creeping even higher, with an average debt of £3,513.01 and a total debt of over £3.5million.

Taken together, this means CAS clients have seen over £7.6m in council tax debt over the course of the pandemic.

CAS is calling on people to make use of the Scottish Government’s council tax reduction scheme which can help reduce future payments. For some people, it can also offer a backdate of up to six months.

CAS financial health spokesperson Myles Fitt said: “This winter is set to be really challenging for so many families across Scotland. The combination of rising energy bills, the impact on incomes from the end of furlough and the £20 weekly reduction in Universal Credit has created a perfect financial storm for the thousands of households who were already experiencing money problems or who were just manging to get by.

“Council tax debt is the biggest debt issue the Citizens Advice network in Scotland sees, and people racked up millions of pounds in arrears during the pandemic. Worryingly, early data for 2021/22 suggests this problem is growing – and that’s before the perfect storm of rising costs and falling incomes hit people.”

According to official figures, the local authority with the biggest council tax collection headache remains Aberdeen City, which had failed to collect 8.1% of what was billed having had a 6.4% rate last year.

They were followed by North Ayrshire and Glasgow City (7.9%), East Ayrshire (6.8%), North Lanarkshire (6.7%) and Dundee City (6.3%).

The council with the best record for collection for a second successive year is Stirling which failed to collect 2.9% of billed council tax, followed by Shetland (3%), Angus (3.1%), East Dunbartonshire (3.3%), Perth and Kinross (3.4%) and East Renfrewshire (3.6%).

It comes as the Scottish Government earlier this month said it would lift curbs on council tax increases next year, ending a flagship policy pursued by the party since it won control of the devolved government in Edinburgh in 2007.

Since 2007, the SNP has frozen or controlled increases to council tax rates. Scottish local councils have complained loudly in recent years that they are struggling to fund vital services.

But Cosla, the body representing Scotland’s councils warned that next year’s funding settlement would be “disastrous” for communities and that essential services have been left in a “precarious position”.

Councillor Gail Macgregor, its resources spokeswoman, said the funding outlined in the Ms Forbes’ Scottish budget represented a £100 million cut.

But Ms Forbes said insisted the spending plan deliver “real-terms growth” for councils.

She added: “It protects the core budget in cash terms and it also ensures that local government are getting a fair share of the health and social care consequentials, which is something that they have long called for.”

A Scottish Government spokesman said: “Average council tax bills across Scotland are lower than those in the other nations of the UK. Council tax brings important administrative and financial accountability to each local authority and is a vital element of funding local public services.

“Councils have a range of actions they can choose to take if someone is unable to pay their council tax. These include discussing and agreeing payment plans.

“The Council Tax Reduction Scheme exists to prevent people falling into council tax debt. People having difficulty in meeting their council tax payments should contact their local authority to see if they are eligible for a reduction which can be backdated by up to six months.

“Currently over 475,000 households receive some level of council tax reduction (CTR). A reduction may be up to 100 per cent, and on average recipients save over £750 a year.

“Enforcement action is also available to councils, including legal action when a household has chosen not to pay the council tax that they owe.”

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