A growing number of organisations are warning that claimants and low paid workers may be faced with a choice between heating and eating when energy prices rocket in April. Energy bills could consume 50% of some claimants’ incomes, one charity has warned.
Gas and electricity bills are forecast to rise by around 50% from April, when the current price cap is lifted.
As a result many on limited incomes will face very harsh choices.
Martin Lewis of the Money Saving Expert website told Radio 4 this week:
“We absolutely know we need a substantial increase in the billions of pounds funding to vulnerable people, and people on low incomes, or it is not an exaggeration to say some will have to choose between heating or eating and that is not appropriate in one of the world’s richest economies and a civilised nation.”
The Institute for Fiscal Studies (IFS) reported this month that claimants need a 6% increase in their benefits, rather than the 3.1% annual uplift that they are scheduled to get in April. Claimants will be £290 a year worse off on average if the current plans are followed, they warned.
The measure would cost an additional £3 billion but there is no sign that the government is likely to implement it.
At the same time, the treasury has announced that it is writing off an eye-watering £4.3 billion of the estimated £5.8 billion lost to fraud in relation to pandemic relief schemes for business, such as furlough payments and loans.
The lost funds would easily have covered a year’s 3% benefits uprating and it is impossible to believe the government would give up on pursuing fraudulent benefit claims so easily.
Meanwhile, the Joseph Rowntree Trust (JRT) has said this week 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 a shocking 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.
JRF is calling for an immediate emergency payment for people on the lowest incomes to help prevent hardship in the months ahead.
Katie Schmuecker at JRF said:
“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.
“Rising energy prices will affect everyone, 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.”
You can read the JRF report here.
You can read the IFS report here.