When chancellor Kwasi Kwarteng unveiled his so-called mini-budget at the end of September 2022 it created a state of abject panic in the markets, with the pound tumbling to historic lows and the Bank of England forced to bail out the economy, causing interest rates to rise sharply. It is, quite frankly, a rather terrifying time to be a mortgaged homeowner.
But what ramifications will the historic tax cuts and energy bill freeze put in place by the chancellor, and the subsequent economic fallout, have on your home in real terms?
Minimal impact
While creating an energy cap of £2,500 might have seemed like a bold move by the government, there are many commentators who feel it will have minimal impact on most homeowners. Yes, there are reports that, without intervention, energy bills could have soared to over £6,000 but, according to money-saving expert Martin Lewis, the cap only applies to the amount energy companies can charge customers per unit of gas and electricity. The £2,500 figure refers to the maximum amount a “typical” household will pay, based on average energy usage.
In real terms, this means that some households will pay more depending on their property type. The £2,500 is just an average figure. It also means that, despite government rhetoric, homeowners should spend as much effort as possible ensuring they use as little energy as possible this winter. Don’t be fooled into thinking that the cap means you can use as much energy as you want without breaking through the cap, particularly if you have a larger home with an older heating system.
So, what should we do?
There is no one-size-fits-all solution to coping with the coming crisis but the best way to steel yourself and your home for the long hard winter ahead is to invest everything you can into making your home energy efficient.
Energy bills are still set to increase by 64% compared to last winter and 7 million households are still set to lapse into fuel poverty. Yes, there is a plan in place to expand the Energy Company Obligation requiring energy companies to use energy-saving measures to help poor homes but that doesn’t kick in until April 2023.
The bottom line then is to ignore the news and focus on making your home as efficient as possible. If you have a fireplace, stock up on firewood and invest in draught excluders to keep the warmth in. Take short showers and try to cut down on the baths, where possible. Wrap up warm rather than turning the heating up. And if your windows are not double glazed then install double-glazed windows in your home, it’s a one-off cost that will pay for itself over just a few seasons.
Above all else, however, try to remain calm. It’s going to be a difficult winter for all of us but as long as we stick together, we can still have a very merry Christmas.