Warning for UK households facing a tough winter on energy bills
Key Points
- Energy price cap set to rise to around £2,000 in January
- Proposed scheme would save households earning under £24,000 an average £175
- Private rents up more than 20% while housing support stays frozen
- Restoring rent-linked support would help over 900,000 households for £2.3 billion
The energy price cap will rise to around £2,000 this January, the Resolution Foundation has warned. The think tank issued the warning in Hitting the Buffers, its Budget preview report, on Tuesday (13 October).
Conflict in the Middle East has pushed up inflation across the UK, with energy bills taking the biggest hit.
The foundation called on Chancellor John Healey to provide fresh cost of living support targeted at households struggling to heat their homes.
It wants a new temporary scheme for people with incomes below £24,000, which would reach beyond benefit recipients.
The foundation estimated the scheme would save eligible households £175 on average and cost £2 billion overall.
It urged Healey to learn the lessons of the last cost of living crisis and avoid wasteful universal support.
Private renters face a separate squeeze, with rents up more than 20% while support for tenants remains frozen.
That rise equals nearly £160 a month for a modest two-bedroom home, the foundation said.
Restoring the link between local rents and housing support would help over 900,000 households at a cost of £2.3 billion.
The foundation said the Government could fund this within the Universal Credit budget if necessary, by increasing the taper rate that controls how quickly payments fall as earnings rise.
Healey must balance this support against repairing the public finances, after the conflict halved his headroom against his fiscal rules to £12 billion.
“Families too will be listening carefully to news of help with their energy bills this winter,” said James Smith, chief economist at the Resolution Foundation.
“The conflict has worsened the UK’s short-term economic outlook, adding to pressure on the public finances while increasing costs for families through higher energy bills and wider inflationary pressures,” said Alex Beer, assistant director of strategy at the Nuffield Foundation.
The Nuffield Foundation funded the report as part of its research into the UK impacts of the US-Iran conflict.
