Number of UK households in fuel poverty expected to triple in April
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The number of UK households struggling to pay their fuel bills is expected to treble in April when the new energy price cap comes into effect, research by the Resolution Foundation has found.
Gas prices surged in September due to a number of factors including high global demand, a cold winter last year and tighter gas supplies from Russia.
The new report finds that the number of families who are expected to have to spend at least 10 per cent of their family budgets on energy bills will treble overnight to 6.3 million households when the new cap is introduced on 1 April.
The proportion of English households defined as living in ‘fuel stress’ is currently 9 per cent but this could leap to 27 per cent when the price cap rises by more than 50 per cent this April to around £2,000 per year. The energy regulator, Ofgem, will announce the new price cap level on 7 February.
The think tank estimates that the government will need to spend more than £7bn in 2022 to offset the effect of soaring energy prices for households.
Levels of fuel stress are set to be highest in the North East and the West Midlands (33 and 32 per cent), among pensioner households (38 per cent), among those in local authority housing (35 per cent) and among those in poorly insulated homes (69 per cent of families in homes with an EPC F-rating).
The Foundation said that the sheer scale of energy bill increases mean that fuel stress will no longer be confined to the poorest households, but low- and middle-income families too.
The report urges the government to target its support at lower income households through the benefits system with a faster-than-currently-planned uprating of benefits in April. Currently, benefits are set to rise by 3.1 per cent.
It also suggests increasing the Warm Homes Discount (WHD) by at least £300 from the current level of £140 and widening its eligibility to all families in receipt of pension credit or working age benefits (8.5 million families in total).
This could be achieved by spreading the costs of energy-firm failure over a number of years (reducing bills by up to £65) and temporarily transferring the social and environmental levies needed to future-proof Britain’s energy supply from bills to general taxation.
Jonny Marshall, senior economist at the Resolution Foundation, said: “Rising gas prices are causing energy bills to soar, and will see the number of families suffering from ‘fuel stress’ to treble to more than six million households this summer.
“Fuel stress levels are particularly high among pensioner households, and those in poorly insulated homes – a stark reminder of the need to modernise Britain’s leaky housing stock and curb national dependency on gas for power and heating.
“The government can take action by targeting support at lower income households via benefits or a bigger and broader version of the Warm Homes Discount. They should also temporarily transfer the cost of environmental levies onto general taxation, as well as spreading the cost of supplier failure over three years.
“While not cheap at £7.3bn, this plan is affordable, and by cutting bills by up to £545 would help prevent the upcoming rise in energy bills turning into a cost of living catastrophe for millions of families.”
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