More than seven million people will be left struggling to pay energy bills once the energy price guarantee increases at the end of March, new research claims.
A report by the Social Market Foundation, in conjunction with Public First and Citizens Advice, says these people will be part of a ‘missing middle’ who won’t be able to afford their bills, but won’t qualify for extra Government support.
In his November Autumn Statement, Chancellor Jeremy Hunt announced the price guarantee, which limits the price households pay for energy per kilowatt hour, would rise from £2,500 to £3,000 per year in April based on average energy usage.
The £400 cost of living payment given to all households this winter will also come to an end, and won’t be brought back for winter 2023.
Hunt said he would extend support for those on benefits, pensions and other vulnerable groups – but the SMF research says this will not cover everyone who needs help.
The missing middle: A quarter of households struggling with bills don’t receive benefits or a state pension
It predicted that 12million households would face ‘crisis-level’ energy costs, of which three-quarters currently receive welfare or a pension.
It means 3million households face paying more than 10 per cent of their income on energy, but will miss out on extra Government support because they don’t receive benefits or a state pension.
Based on an average 2.4 people per household, it means 7.2million people are in the ‘missing middle’ of the energy bill policy, many of who are on mid-range incomes.
Amy Norman, SMF senior researcher said: ‘High energy prices could be the new normal, but our current energy policies aren’t set up to help people with what could be a decade of painfully high bills.
‘Our current approach means millions of people are missing out on the help they really need.’
The report also said that while pensioners will receive Government help, some are in less financial need.
Wealthy pensioner households will still receive help
Using the state pension alongside benefits to target support means one in three households in the richest 10 per cent will receive support from the Government, according to the report.
Dame Clare Moriarty, chief executive of Citizens Advice, said: ‘Sky-high bills are pushing families who’ve never needed support before to seek help from Citizens Advice.
‘Meanwhile, people who were already struggling are being dragged deeper into the red.
The Government must come up with a clear plan to ensure people in need don’t fall through the cracks of current support measures
Dame Clare Moriarty, chief executive of Citizens Advice
‘With huge energy costs here to stay, it’s absolutely vital support continues to reach those on benefits.
‘But this research shows the Government must also come up with a clear plan to ensure people in need don’t fall through the cracks of current support measures.’
The report calls for a longer-term approach to Government support that can more accurately direct help to households with the greatest need, and voters are prepared to accept higher taxation to fund it.
In July, 52 per cent of people the Social Market Foundation polled said they were in favour of support policies even if it led to tax rises. In October, this had risen to 64 per cent.
There is also growing support for a Government energy efficiency scheme, which would help to insulate homes whose residents have low incomes. The cost would be around £27billion, delivering annual savings of £3billion, the report said.
The Government has this week extended a scheme offering grants to those who
Four in ten voters preferred this kind of help to be targeted at those on lower incomes, while 54 per cent said it should be available to everyone.
The report found that 14 per cent of homeowners would not be willing to contribute at all and a further 23 per cent would not contribute more than £250. Only 10 per cent said they would be willing to contribute £3,000 or more.
Daisy Powell-Chandler, head of energy and environment at Public First, said: ‘Crippling energy costs make the case for action on energy efficiency stronger than ever: we simply cannot afford to go on wasting heat.
‘Radical policy change is required to better understand where the need is greatest and how to support and incentivise Britons to upgrade their homes – while getting financial support to the families who need it now.
‘Solving these problems will not be cheap or simple but the pay offs will be myriad: lower household bills, falling poverty, reduced government spending, more jobs, better health outcomes, increased energy security, a lower carbon footprint and cosier homes.’