UK households will be £107 worse off from next month
At the same time, the energy price cap increases from 1 October, pushing the average bill for a household on a default tariff up by £139.
More than four million prepayment customers will see an even larger annual increase of £153 – or £13 a month.
Analysis by Royal London found families could be £107 a month worse off because of the changes.
Sarah Pennells, consumer finance specialist at Royal London, said: “The Covid-19 pandemic is perhaps the biggest life shock our society has experienced. As we continue to feel its effects, there’s never been a more urgent need to help those who are financially vulnerable.”
Recent research by Royal London found that 15.9 million UK adults are more financially vulnerable as a result of the Covid-19 pandemic.
Meanwhile, a survey by poverty charity Turn2Us found that over half (52 per cent) of people on Universal Credit will struggle to pay their bills when the cut comes into effect, with a further one in four people (25 per cent) unable to afford their rent or mortgage payments.
Thomas Lawson, chief executive of the charity, said: “The coming months will undoubtedly be very hard for individuals and families across the UK.
“The £20 per week cut to Universal Credit was already going to leave many families struggling to keep up with the cost of living. This, now combined with a sudden surge in energy prices, could spell disaster and plunge thousands more people into financial insecurity or even poverty; especially those of us whose financial resilience has been worn away by the pandemic.”