The number of English households in ‘fuel stress’ will double from 2.5 to 5 million as a result of the price cap rising from today, a think tank that focuses on living standards warns.
A new briefing by the Resolution Foundation has calculated that the price cap rise will hit low-income households the hardest, with the poorest fifth of households set to spend over twice as much of their family budgets on energy bills as the richest fifth.
Families living in poorly insulated homes (with an energy efficiency rating of E) will feel rising energy prices more than others, with their bills set to be £320 a year higher than those in similarly-sized C-rated homes.
In October, when the price cap is set to rise again to £2,500, this ‘efficiency gap’ could hit £380.
The Government’s Energy Rebate Scheme – a £150 Council Tax (CT) rebate and a £200 discount for all billpayers – will reduce the impact of the energy price cap rise. It will limit the rise in low-income households’ spending on energy bills from 7% to 10%, rather than 7% to 12%.
However, the Foundation warns that support does not go far enough and that the number of households experiencing ‘fuel stress’ – spending at least 10% of their total household budgets on energy bills – will double overnight from 2.5 to 5 million households. Another 2.5 million households will be hit in October.
Jonathan Marshall, senior economist at the Resolution Foundation, said: ‘Today’s energy price cap rise will see the number of households experiencing fuel stress double to five million. With the price cap is expected to rise sharply again on 1 October, a further 2.5 million households could fall into fuel stress this autumn, unless more support is provided.
‘There are no easy ways to protect people from rising bills in the current climate. But with many of the poorest households missing out on the Council Tax rebate, this scheme should be used to supplement, rather than replace, support via the benefit system, which is better equipped to target lower-income families.
‘Another increase in energy bills this autumn hastens the need for more immediate support, as well as a clear, long-term strategy for improving home insulation, ramping up renewable and nuclear electricity generation, and reforming energy markets so that families’ energy bills are less dependent on global gas prices.’
