William Eichler 17 January 2022

Households suffering ‘fuel stress’ set to treble to over six million

Households suffering ‘fuel stress’ set to treble to over six million image
Image: Alex Yeung / Shutterstock.com.

The number of households suffering from ‘fuel stress’ is set to treble this April to over six million as a result of the new energy price cap.

The price cap on energy is the maximum amount a utility company can charge an average customer per year for electricity and gas. Introduced in 2019, it protects consumers from energy price hikes.

The energy price cap is set to rise by more than 50% this April to around £2,000 per year.

The think tank Resolution Foundation has calculated that the increase in the cap will lead to 6.3 million households suffering from ‘fuel stress’ – defined as spending at least 10% of their family budgets on energy bills.

The research shows that the proportion of English households in ‘fuel stress’ is currently 9%. It is expected to leap to 27%.

Levels of fuel stress are set to be highest in the North East and the West Midlands (33% and 32%), among pensioner households (38%), among those in local authority housing (35%) and among those in poorly insulated homes (69% of families in homes with an EPC F-rating).

The Resolution Foundation says that the most effective way to support lower-income families is through the benefits system or through the Warm Homes Discount (WHD) which, the think tank argues, should be increased by making the £140 payment at least £300.

‘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,’ said Jonny Marshall, senior economist at the Resolution Foundation.

‘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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