Cost of living: Poorest families will be hit hardest by energy bills surge, charity warns

The poorest families will be hit disproportionately hard when the Energy Price Cap rises in April – according to analysis by the charity The Joseph Rowntree Foundation. 

They say some of those earning the least could end up spending 54% of their household income on energy bills when the price cap goes up, leaving them unable to cope.

‘We have really, really struggled as a household’

Single dad Anthony is one of thousands across the country terrified about the impending rise. He had to stop working because of a disability – and now cares for his nine-year-old son and four-year-old daughter using just Universal Credit.

He says he already has to rely on charity handouts just to pay for things like school uniforms – and sometimes even food for his children.

“No father likes to admit they are struggling,” he told Sky News. “We receive about £1,000 a month in Universal Credit, and that supports the children as well as myself. And we find ourselves in a deficit of around £200 to £400 – and that’s obviously going to increase as the energy prices increase as well.”

“We have really, really struggled as a household. And to hide that from your children is one of the most difficult things to do.”

Three options left to insulate households from ‘50% increase in bills’

Energy Price Cap increase

Because of soaring energy costs, the amount companies can charge customers on certain tariffs under the government’s Energy Price Cap is predicted to go up in April by around 51%.

While it will be difficult for most customers to swallow, the analysis by the Joseph Rowntree Foundation found the increase is likely to devastate the finances of the poorest families, who are already facing spiralling household costs.

The charity found that when the price cap goes up, the average low-income family will end up spending 18% of their household income after housing costs on energy bills.

For single adult families on low incomes, this rises to a huge 54%. Meanwhile, the impact on higher-earning families will be much less severe – it says middle-income households will be spending an average of 6% of their income on energy bills.

It also found 1.8 million children across the country are now living in what they call ‘very deep poverty’ – meaning there isn’t even enough money to cover the absolute essentials.

It comes after think-tank The Resolution Foundation found that the number of households suffering “fuel stress” because they spend 10% or more of their budget on energy bills looks set to triple to 6.3 million.

Emergency payments demanded for poorest families

The charity – along with many other organisations – is calling for the government to step in to cushion families from the increase.

“Heading into the cost of living crisis we now find ourselves in, those families whose budgets are already under constant pressure are going to find themselves sinking even deeper into poverty,” said Katie Schmuecker, the Foundation’s deputy director of policy.

“What we need to see is urgent action from the government – an emergency payment – that goes to families on the lowest incomes to help them get through this crisis.

“But we also need to be asking ourselves why families are so exposed to the cost of energy. One of the reasons is that our social security system is simply not providing enough support.”

Charities who support families in poverty also say demand for their services is skyrocketing. Christians Against Poverty – who help with household debt – told Sky News the number of appointments made for their debt help service was 41% higher last month compared to December 2020, while the number of calls to their helpline was up by almost a third.

The government says it has already taken decisive steps to protect the most vulnerable households.

“The Energy Price Cap has been protecting around 15 million households from high global gas prices. We are also supporting vulnerable and low-income households with the cost of fuel bills through schemes such as the Warm Home Discount and our £500m Household Support Fund,” a spokesperson for BEIS said.

“We will continue to look closely at the pressures facing people and what further measures might be needed on abating high energy costs.”

(c) Sky News 2022: Cost of living: Poorest families will be hit hardest by energy bills surge, charity warns


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