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Don’t Pay UK campaign will damage people’s finances

Don’t Pay UK campaign will damage people’s finances
 

As more than 100,000 people pledge to not pay their energy bills in protest over soaring prices, the financial sector has expressed concerns over the impact the campaign will have on the protestors’ financial futures. 

Formed in June in response to predictions of spiralling energy bills in winter and early next year, the 'Don't Pay UK' campaign group aims to gather pledges from one million people who are willing to cancel their energy bills.

Unless the government and energy companies drastically reduce bills by October 1, the group said it will trigger mass non-payment.

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But some in the financial sector have warned choosing to not pay energy bills could have a long term impact on the individuals involved, particularly on their ability to use credit.

“Don't Pay UK is playing fast and loose with many people's financial futures and their ability to become or remain homeowners if they get this wrong,” warned owner of Shaw Financial Services, Lewis Shaw. 

While sympathetic to the cause, Shaw warned that the protestors risk damaging their credit histories which will mean any borrowing, whether for a mortgage, personal loan or credit card, will be at a higher interest rate. 

“It will be a millstone around consumers' necks for up to six years,” Shaw said.

Likewise, Lentune Mortgage managing director, Stuart Gregory pointed out because energy suppliers submit records of payment history to the credit agencies monthly, non-payment will likely result in difficulties later in life. 

“Anyone considering taking part should proceed with caution,” Gregory warned. “Always speak with your energy suppliers before making a decision which you may regret for longer, later.”

Past protests

Don’t Pay UK has compared the protest to the mass non-payment in the late 80s and 90s, when more than 17mn people refused to pay the poll tax – helping bring down the government and reversing its harshest measures.

But London Money’s mortgage and protection consultant, Catherine Davidson said this is not a fair comparison. 

“Non-payment of your council tax does not get recorded to the credit agencies unless you end up with a county court judgement so it’s unlikely this would have had as much of a long term impact on the individual back then as it would today. 

“With our information readily available and updated every 30 days I would urge caution on non-payment of your energy,” she said. 

Despite the concerns, both Davidson and Shaw agreed that the government should do more to alleviate the pressures on people. 

“Whilst I believe something needs to be done by the government to halt energy prices rising and protect families, not paying your energy bills is not the answer. Whilst Don’t Pay UK may be trying to start a revolution to fix rising energy prices it could cause catastrophic effects to people further down the line when they need to apply for any kind of credit.”