In the News

Cost of Living Crisis Set to Worsen as Energy Prices Predicted to Rise Higher than Previously Thought

Vicki Woolven

4th August 2022

With many people already struggling with the cost of living, which has affected fuel bills, supermarket bills and energy bills, the situation is prediction to worsen over the winter months, leading to fears about how people will cope with soaring costs.

In May, the energy regulator Ofgem said the typical household should expect to see an £800 increase to £2,800 a year, but it now admits prices are looking higher than when that estimate was made.

Ofgem has changed the rules so that its price cap can change every three months instead of every six. The energy price cap (the maximum amount suppliers can charge customers in England, Scotland and Wales for each unit of energy) will increase in October, meaning on average customers will pay £3,358 a year for their energy. Which is worrying enough before we consider that the cap can rise every three months, so is predicted to go up again to £3,615 a year from January. The average bill was £1,400 a year in October 2021.

Ofgem said customers "face a very challenging winter ahead" and acknowledged the situation was "deeply worrying" for many people.

Read more here - https://www.bbc.co.uk/news/bus...

Even the energy companies are warning of the impact on customers - E-On (one of the UK's biggest energy suppliers) claims that up to 40% of its customers will be in fuel poverty by the autumn.

A household is considered to be in fuel poverty if it has to spend 10% or more of its disposable income on energy.

E-On says that around one in eight households are already struggling to pay their bills, and once the weather turns colder and the higher energy cap comes into force, this will get much worse.

Read more here -https://www.bbc.co.uk/news/bus...

This claim is supported by the National Energy Action charity, who say "Millions will simply not be able to heat their homes [this winter]. We will see serious ill-health and early deaths for those most susceptible to the cold."

How are the government helping to lessen the cost of living crisis for UK households?

Currently there is a package of support measure in place....

Low income households

A £650 payment will be made to more than eight million low-income households who receive the following benefits: Universal Credit, income-based Jobseekers Allowance, income-related Employment and Support Allowance, Income Support, working tax credit, child tax credit, pension credit.

Pensioners

Pensioners will receive an additional £300 in November or December, on top of the existing Winter Fuel Payment - which is worth £200-£300 and is paid to nearly all homes with at least one person of pension age. Lower-income pensioners, who claim pension credit, will receive the money in addition to the £650 support for those on benefits.

People on disability benefits

Those on disability benefits will receive £150 in September, which may be on top of the £650 payment, because in many cases they have higher energy use. Anyone receiving the following benefits will be entitled to the extra £150: Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Scottish Disability Payments, Armed Forces Independence Payment, Constant Attendance Allowance, War Pension Mobility Supplement.

All households

Finally, all UK households will get a grant which will reduce energy bills by £400 from October. Originally this was supposed to be a loan of £200, which would be paid back in instalments over five years. However it has now doubled and does not need to be paid back. So essentially, from October, everyone's energy bill will be reduced by £400. This will be applied in monthly instalments over six months.

Full details here - https://www.bbc.co.uk/news/bus...

But will these support measures be enough to ensure that UK households are not having to choose between food on the table and heating?

Vicki Woolven

Vicki Woolven is Subject Lead for Key Stage 4 Humanities at tutor2u. Vicki previously worked as a Head of Geography and Sociology for many years, and has been a content writer, senior examiner and local authority Key Practitioner for Humanities.

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