Rising energy bills will ‘devastate’ poorest families
The energy price cap, which sets default tariffs, is estimated to rise by £700 in April – more than a 50% increase. Around 11 million households on default tariffs will see their bills increase straight away.
Analysis from the charity found that households on low incomes will be spending on average 18% of their income after housing costs on energy bills after April. For single adult households on low incomes this rises to 54%, an increase of 21 percentage points since 2019/20.
Lone parents and couples without children will spend around a quarter of their incomes on energy bills, an increase of almost 10 percentage points in the same period.
The analysis compares the household spend on gas and electricity bills of several different family types on low and middle incomes between 2019-20 and after the increase in April this year.
While there is little difference in the overall increase in bills from April, with all households facing an immediate increase of between around 40% and 47%, the difference in the proportion of household incomes these increases will represent is stark. Middle-income households will be spending on average 6% of their incomes on energy bills, and no more than 8% for any family type considered.
The figures are released alongside Joseph Rowntree Foundation’s flagship state-of-the-nation report which reveals that about 1.8 million children are growing up in “very deep poverty”, meaning the household’s income is so low that it is completely inadequate to cover the basics.
The findings also highlight large numbers of children living on low incomes for prolonged periods of time in the years running up to the pandemic. About one in five children have lived on a low income for at least three of the four years between 2016 and 2019. For children in lone parent families this rises to around one in three children.
The foundation is warning that without additional support, people already in poverty are likely to find a sharp increase in energy bills very difficult to cope with. People living in deep and persistent poverty were already under constant pressure trying to afford food, bills and other essentials.
The charity says that following a cut to Universal Credit in the autumn, the level of support for people who are unable to work or looking for work remains profoundly inadequate. It is calling for an immediate emergency payment for people on the lowest incomes to help prevent hardship in the months ahead.
The call echoes that from Citizens Advice which has called for ‘energy support grants’ to be introduced.
Katie Schmuecker, deputy director of policy and partnerships at JRF, said: “No childhood should be defined by a daily struggle to afford the basics. But the reality is that many children growing up today won’t have known anything else. The fact that more children are in poverty and sinking deeper into poverty should shame us all.
“Rising energy prices will affect us all, but our analysis shows they have the potential to devastate the budgets of families on the lowest incomes. The government cannot stand by and allow the rising cost of living to knock people off their feet. The alarm is sounding loud and clear and the case for targeted support to help people on the lowest incomes could not be clearer.
“But this must go hand in hand with urgent action to strengthen our social security system, which was woefully inadequate even before living costs began to rise. Our basic rate of benefits is at its lowest real rate for 30 years and this is causing avoidable hardship. The government must do the right thing and strengthen this vital public service.”