What's stopping us from switching energy provider?

What’s stopping us switching energy provider?

Despite today’s high energy prices, many consumers have yet to change their energy supplier, meaning they’re missing out on big savings. So what’s stopping people from taking steps to cut their bills?

Energy prices are painfully high, with typical households spending £1,130 a year on their gas and electricity bills.

The good news is that savings can be made by switching to a cheaper tariff. The bad news is that millions of Brits are sticking with expensive deals and paying over the odds to keep their houses warm and their TVs running.

Even with record numbers switching last year, nearly 60% of households in the UK are still on standard variable rate tariffs1, generally the most expensive. Despite this record-breaking year, 23% of Brits have never switched their energy provider.

We wanted to find out just what’s stopping us from switching energy provider, and what it would take to finally convince us that it might be in our best interest to do so.

Within our report, we’re looking to gain an insight into the challenges Brits associate with switching energy provider so we can encourage more people to switch and help the country save money and energy.

Switch to save

Even though the savings Brits could be making are more than the amount they say would tempt them to do so, many still seem hesitant.

Amount of savings needed to convince you to switch vs average savings with MoneySuperMarket

Despite the average savings on MoneySuperMarket being £2502, significantly higher than the amount that the British public claimed would tempt them to switch, a large proportion still aren’t taking the steps to do so. It seems that, while financial savings might be on the minds of Brits when considering their energy bills, other factors must also come into play.

A big reason why some Brits aren’t switching provider and saving money may be that many haven’t shopped around. Nearly a quarter of Brits admitted to having never checked to see if they could save money on their energy bills.

So, what would make Brits reach boiling point and look into switching energy provider?

What would convince you to switch energy provider?

The biggest motivators have a financial edge, with 58% claiming that the savings available had to be worth the time to go through the process of switching. Meanwhile, 41% said that an unacceptable increase in their energy bill would be enough to make them consider moving to another provider.

Similarly, the opportunity to get a good deal through a one-off incentive or promotion might have a bearing on the thinking of the general public: 18% of Brits claimed that an incentive or promotion would make them more likely to switch.

From a non-financial perspective, poor customer service from existing providers is a major bug-bear for nearly one in five Brits, with many saying that this would be likely to make them look into switching provider.

Although most British citizens said financial reasons were the main consideration when debating whether to switch, there were other factors – particularly among younger customers.

For those aged 18 to 24, a lack of understanding of the process is preventing them from switching when compared to other age groups. One in five say they would be more likely to switch if they understood the switching process better.

And interestingly, while only 8% of Brits see changing to a renewable or greener energy provider as a motivator for switching, this is much higher among those aged 18 to 24. The younger generation think of green energy as a stronger stimulus, with 21% saying it would be a factor in making them switch provider.

Furthermore, Brits appear more inclined to switch if their bills go up than if they can save money, despite claiming the opposite. For example, a bill increase of £49.99 would tempt over half of Brits to switch provider but only a third would consider switching if they could save £49.99.

Finding the energy to switch

In the UK, nearly a quarter of households have never switched their energy provider – that’s roughly 7 million homes. This is even higher in the North-West, where 37% have stuck with their current energy provider through increases in bills. At the same time, 67% from the same area say they would switch if their energy bill was increased by an unacceptable amount.

So, our research has already shown us what would convince Brits to switch, but what are the barriers to switching that are blocking our way?

Perhaps surprisingly, given the high cost of energy and the big impact bills have on household budgets, 37% of Brits still believe they’re getting good value.

People who believe they're getting a good deal on energy, by age

Out of these, over half of those aged over 55 believe they’re getting a good deal with their existing provider, and results suggest that Brits are more likely to believe they’re getting a good deal on their gas and electricity bills as they get older. Beyond this, however, barriers to switching often stem from a lack of awareness or misunderstanding of the process.

A significant proportion of the British public believe the switch will be too much hassle (22%) or that it will take too much time (16%). But the actual process of selecting and confirming a new provider can be done in around five minutes, and with only a few clicks of a mouse. The actual switch of provider should be completed in no more than three weeks.

12% were worried that they’ll be without gas or electricity while switching – this is not true as there’s no interruption to the supply during a switch, and there’s no need for work inside or outside your property. Switchers get the same gas and electricity through the same pipes and wire - only the bill changes.

Additionally, a further 17% worry that they won’t receive the advertised savings and will end up in a similar financial position to before they switched. But if they put in correct information when completing a quotation - and everything required is printed on their energy bill - then they will get an accurate quotation that will be reflected in their future bills from the new supplier.

The younger generation, again, have shown that a lack of understanding is keeping them from taking steps to switch energy provider: a quarter of those aged 18 to 24 said that they don’t understand the terminology around energy switching.

However, with only 31% of UK millennials having bought a home3, this might not come as a shock – many are living with parents or in rented accommodation, where they may not be paying the energy bills.

Britain’s most switch-savvy areas

While those in the North-West are the most switch-averse in the UK, the Welsh are the making the most of the competition in the energy market, with 50% having switched energy provider in the last year.

On top of spending the most on rent and transport, it’s perhaps surprising that Londoners are also spending the most on their energy bills, with a huge average monthly bill of £108.84. London’s expensive energy prices come into especially stark contrast when compared to the Midlands, who have energy bills that are, on average, £35 cheaper per month.

The reluctance of those from the capital to switch and save may be down to a misunderstanding of the process. One in four Londoners worry they’ll be without gas or electricity while switching, more than any other area and over double the UK average.

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Sources

 

All data (except where stated below) is based on a MoneySuperMarket survey of 1000 people, between 17th and 18th January 2018

1 https://www.ofgem.gov.uk/publications-and-updates/ofgem-publishes-supplier-standard-variable-tariff-league-table

2 MoneySuperMarket data 2017

3 http://uk.businessinsider.com/properties-overseas-uk-millennials-ownership-2017-4

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