Millions in UK face fuel poverty despite Sunak’s support, experts say | Economy


Millions of UK households are set to be pushed into fuel poverty for the first time despite support announced by Rishi Sunak to soften the blow from soaring energy bills.

Several charities have warned that the Chancellor’s plan was poorly targeted and offered too little support for those most in need. The scale of the shock to low-income households would lead to hunger, rent arrears and health problems, and pile additional demand on already stretched food banks and homeless shelters, they said.

The Resolution Foundation think tank said cases of energy stress – where a household’s energy bills exceed 10% of disposable income – will double to 5 million in April despite measures announced by Sunak on Thursday.

The Treasury intervention was designed to ease the pressure of a £700 increase in the regulated energy price cap to almost £2,000 a year.

Without the Chancellor’s plan – which gives most consumers £350 relief on their bills – fuel stress would have tripled to more than 6million, the thinktank said. However, he criticized Sunak’s decision to prioritize moderate help for large numbers of people, rather than more in-depth support for those who need it most.

Energy graph

“The government’s package may cushion the blow for some, but it’s not enough to protect people who already need a food bank,” said Garry Lemon, policy director for the food bank network. TrussellTrust. He called for the planned 3.1% increase in benefits from April to be doubled to 7%.

Almost every family in the tenth of the poorest households in Britain has to spend more than 10% of their disposable income on heating and electricity bills, according to think tank IPPR. % – would indeed get a tax cut thanks to Sunak’s measures.

Dame Clare Moriarty, chief executive of Citizens Advice, said: “Even before these price hikes took effect, we are seeing record numbers of people in need of crisis support, such as food stamps… If the government really wants to help families facing the desperate choice between heating it and eating it should use the benefit system.

Pressure on incomes will increase in the coming months after the Bank of England raised interest rates from 0.25% to 0.5%, in a development designed to combat rising inflationary pressures, but which will likely drive up household costs in the short term.

Bank economists expect inflation to peak at 7.25% in April, from 5.4% currently. Along with the rising cost of a weekly shop, UK households will also face higher borrowing costs on mortgages and credit cards. The government is also planning an increase in National Insurance contributions in April – the same month as energy prices rose.

Tony Syme, a macroeconomics expert at the University of Salford Business School, said: “Rising interest rates will have minimal effect on inflation and will only exacerbate the cost of living crisis. Higher housing costs will be passed on to homeowners through higher mortgage rates and to renters as homeowners pass on their increased borrowing costs.

Sign up for the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

“These energy crisis measures are woefully inadequate and will leave those with the lowest incomes and the least efficient homes at great risk,” said Adam Scorer, chief executive of the charity National Energy Action. “We needed deep and targeted support for the most vulnerable. We have superficial and broad measures for all. It just doesn’t work.

Although the Chancellor announced a £150m grant for English councils to help struggling families, critics said the dismantling of the local welfare system over the past decade meant that many authorities lacked the resources and expertise to provide meaningful crisis support.

“The budget cuts mean that 32 English councils have closed their crisis schemes, leaving 13 million people in England without this support. These local authorities no longer have the infrastructure or processes in place to direct additional public funds to those most in need,” said Claire Donovan, of End Furniture Poverty.


About Author

Comments are closed.