Chancellor Jeremy Hunt laid out much of his mercy credentials in today’s autumn statement, but the vast majority of households will see their energy bills increase by £900 next year, adding to bills that charities have warned are already unsustainable.
The Government’s Energy Price Guarantee (EPG), which sets typical energy bills at £2,500 until April, is being extended for another year. However, at that time, the cap will rise to £3,000 based on average usage. With energy prices expected to remain high throughout the next year, Hunt said the intervention would save the average household £500.
Without continued government support, average bills would have risen to £3,740 a year, according to most analyst estimates. Average bills of £3,000 will be double what they were before the energy crisis took hold.
Hunt also announced an extra £900 for families on all benefits tested, £300 for pensioners and £150 for people on disability benefit. There will also be a further £1 billion given to local councils to help those who “would otherwise fall through the cracks”.
However, the announcement spells potential disaster for those whose income is just above the point at which they are entitled to benefits. This winter they and everyone else were given £400 with the energy bills subsidy scheme, originally announced by Chancellor Rishi Sunak.
Next winter, this batch will not be repeated. When combined with an increase in the price cap, this would leave average households paying an extra £900 a year to heat and light their homes – on top of higher mortgage costs and in the face of food inflation currently running at 17%.
The largest and most energy-intensive households would be £1,500 a year worse off, suggesting Hunt may have to step in again this time next year.
More and more families are already falling behind on their energy bills, said Rebecca MacDonald, of the anti-poverty charity Joseph Rowntree, and are “going without the essentials they need”.
“Using one-time payments to help with the cost of living may mitigate some of the looming catastrophe, but those who don’t narrowly qualify will be hit hard. This winter and beyond continues to be a daunting hurdle to simply providing for essentials.
Rocio Concha, who? Additional support for the most financially vulnerable and an extension of the Energy Price Guarantee will provide some much-needed relief, said the Director of Policy and Advocacy, but may not be enough.
“It won’t just be those on lower incomes who will struggle to afford higher bills – for example, people on lower middle incomes who lose out on extra support will need to find close to £1,000 more to cover their energy costs,” he said. . .