The number of English households in fuel stress is predicted to double from 2.5 to 5 million as a result of the energy price cap rising from this month, with another 2.5 million households at risk in October if the price cap rises again, warns the Resolution Foundation.
The new briefing, Stressed Out, shows that low-income households will feel the tightest pinch from rising bills, 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 will also feel rising energy prices more than others, with bills set to be £320 a year higher for households with an energy efficiency rating of E compared to similarly sized properties with C ratings. Come October, this ‘efficiency gap’ could hit £380.
The Resolution Foundation found the Government’s Energy Rebate Scheme will go some way to reduce the impact of the price cap rise, limiting the rise in low-income households’ spending on energy bills from 7 to 10% instead of 7 to 12%.
However, the Foundation warns the support does not go far enough to protect low-income households from rising energy bills.
The briefing shows that a £500 rise in the price cap to £2,500 on 1 October – less than the OBR forecast of a £830 rise, although this was made when gas prices were higher than they are now – would mean that almost a third of all families in England would fall into fuel stress – 7.5 million households in total.
Jonathan Marshall, Senior Economist at the Resolution Foundation, said: ‘With the price cap 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.’
11% of the poorest fifth of households are ineligible for the government’s rebate because they live in Band E-H properties, while 59% of the richest fifth are eligible.
Poor households in London, where one-in-five of the poorest fifth of households live in Band E-H properties and are therefore ineligible for automatic support, are most likely to miss out, according to the Resolution Foundation.
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