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Cost of Living Crisis

February 2022
 
Prices are rising at the fastest rate in 30 years; energy bills alone will rise by more than 50% in April. For the average household on a default tariff (11 million households) that would be an increase of around £60 per month. That doesn’t include an additional £94 which will be clawed back via energy bills from April 2022 to pay for the cost of dozens of energy companies failing.
 
We are all feeling the squeeze but the soaring costs of essentials will hurt low income families, whose budgets are already stretched, most. 
 
Families are still reeling from the £20 cut to Universal Credit last October. And, though benefits will increase by 3.1% in April, inflation is projected to be 6% by then. This means yet another real terms cut to incomes.
 
In response to this latest energy cap price rise, the government has announced a package of support to help households with rising energy bills. But it's a complicated and untargeted package of measures. While it provides some relief for all households come April, for people on low incomes who need it most, there are far easier ways for the government to deliver targeted support.
 
You can read more about the issues families are facing in our latest research report below:
 
 
Citizens Advice, drawing on their expertise as the energy consumer watchdog and leading welfare advice provider, recommend four steps to deal with the challenge over the coming year:
  1. Reduce the immediate financial pressure low income households will feel in April. The best way of doing this quickly is through a one-off payment via the benefits system. 

  2. Spread the cost of energy supplier failures over a longer period (2-3 years) rather than current plans (recovering the majority in 2022/3)

  3. Uprate benefits in line with current inflation, offset by lower increases in the following financial year (with the overall impact of the change being cost neutral).

  4. Recognise this crisis will stretch through to next winter - when the risks from cold weather are greatest - and start developing solutions now. By increasing and extending the Winter 2022 Warm Home Discount we can have the provision in place that will protect the lowest income households from the worst excesses of the coming price increases. 


Need advice? 

If you're worried about rising energy costs, struggling to pay your bills, or would like information about support schemes to help lower your energy costs please contact us.

 

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