UK energy regulator Ofgem today announced an increase to the price cap on energy bills by 54%. This price cap could see households’ bills tripling to a total of £1,971, and for those on prepayment meters the price hike will be even more of a crippling burden. The astonishing increase in energy prices will affect everyone in this country, but it will be a devastating blow to the millions already in poverty, trying to keep afloat and struggling with debt.
Worse, it seems that the government’s current proposals: a £350 ‘discount’ to be repaid over five years from 2023, a £150 council tax rebate for council tax bands A to D in April and £150m for local authorities to help lower-income households, are woefully inappropriate and does not take account of the perfect storm of factors putting unsustainable pressure on low-income families: rising energy prices, inflation a cut in benefits and National Insurance tax rises due in April. Short term solutions aimed at the better off or homeowners will not do anything for those on the brink of poverty, living in rental accommodation or not able to work.
There is currently inadequate financial support for the poorest across the UK. The Levelling Up White Paper barely acknowledges poverty despite the inextricable link between poverty and systemic inequalities in this country (e.g. health, housing, jobs and wages and it doesn’t mention child poverty at all despite a huge increase in the levels of children in poverty in this country in the last decade). The rise in energy prices, combined with cuts in benefits and increase in food prices could see millions more households, including lone parent households, and larger households on benefits thrown into fuel poverty from April.
The Equality Trust believes that the government must implement a cross-departmental strategy to level up people on low incomes. Loans to help families through the energy crises are not appropriate for those on low incomes, and energy caps will not protect the poorest. The government must target financial support on low income families, starting with an increase in benefits in order to take account of the perfect storm of factors that will hit them harder and push them deeper into poverty.
Dr Zubaida Haque, Executive Director at The Equality Trust, said:
“COVID-19 shone a light on the devastating link between health and wealth, but also showed us how inequalities in health are strongly linked to inequalities in other areas of our lives – housing, jobs, education, transport, digital access and green spaces. Supporting people through financial crisis, and addressing inequalities, cannot be short term and focus on the energy crisis alone. We need a cross-department strategy that ensures that those on low incomes across the whole country are financially supported through a perfect storm of higher prices but lower incomes. The case for supporting those on low and insecure incomes has never been stronger.”
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- For interviews or further comment please email jo.wittams@equalitytrust.org.uk
- The Equality Trust is the national charity that campaigns to improve quality of life in the UK by reducing economic and social inequality. The UK is one of the most unequal countries in the developed world and evidence shows that in countries with higher levels of inequality, we see higher rates of mental and physical ill health, higher rates of imprisonment and violent crime, worse educational outcomes and lower levels of trust. Inequality is not inevitable.