Britain is thankfully stepping out of a global pandemic. But it is now stepping straight into a painful cost of living crisis.
The focal point for this squeeze is a 54 per cent increase in the energy price cap this April – sending the typical energy bill soaring to around £2,000 a year.
Low-income families are at the heart of this squeeze as they spend far more of their family budgets on bills.
The Government had to act – and has done so with a major package of support that will provide rebates on electricity and council tax bills of around £350 this year to around four-in-five households.
This is significant, welcome help. But it is enough to tackle Britain’s cost of living crisis? No. Here’s why.
First the Chancellor seems to have forgotten that lower income families are hardest hit by rising energy bills.
By giving support to almost everyone, rather than targeting at those most in need, people at the sharp end of the crisis aren’t being helped enough.
The number of families falling into ‘fuel stress’ – spending at least £1 in £10 of their family budgets on bills alone – will double to five million this summer.
Second, the support may not reach people quickly enough. The £200 energy bills rebate won’t arrive in people’s bank accounts until October. But people are struggling right now.
And while the £150 Council Tax rebate is coming this April, one-in-eight of the poorest families in England won’t even qualify for support because of the houses they live in.
Finally, most of the £9 billion of support is being paid for via higher energy bills over the next five years.
This is a risky strategy, especially if the cost of gas doesn’t fall sharply and soon.
High energy bills could be a feature of the 2020s – continuing to hammer the poorest in society – and a reminder of the need to wean ourselves off fossil fuels.
The Government has made a major intervention to tackle the energy bills crisis. But this isn’t the only cost of living challenge families face.
Tax bills for a typical family are due to rise by £600 a year from April. Inflation is forecast to hit a 30-year high this Spring, causing everyone’s pay packets to shrink.
The Bank of England is forecasting the tightest living standards squeeze this year in seven decades.
There is only one way out of this crisis long-term – a return to strong growth and higher wages, with support for those that need it most.
