The chancellor Jeremy Hunt made much of his compassionate credentials in today’s autumn statement, but the overwhelming majority of households will see their energy bills increase by £900 next year, adding to bills that charities have warned are already unaffordable.
The government’s energy price guarantee (EPG), which is capping typical energy bills at £2,500 until April, is being extended for another year. However at that time the cap will rise to £3,000 based on average usage. With energy prices forecast to remain high throughout next year, Hunt said the intervention would save the average household £500.
Without the continued government support, average bills would have been expected to rise to £3,740 a year, according to most analyst estimates. Average bills of £3,000 will be double what they were before the energy crisis took hold.
Hunt also announced an extra £900 for households on all means-tested benefits, £300 to pensioners, and £150 for people on disability benefit. There will also be an extra £1bn given to councils to help those “who might otherwise fall through the cracks”.
However, the announcement spells potential disaster for those whose income is just above the point at which they are entitled to benefits. For this winter, they along with everyone else have been given £400 through the energy bills support scheme, originally announced by Rishi Sunak when he was chancellor.
Next winter, that payment won’t be repeated. When this is combined with the price cap increase, it will leave average households paying an extra £900 a year more to heat and light their homes – on top of higher mortgage costs and in the face of food inflation currently running as high as 17%.
Larger, more energy-consuming households, will be £1,500 a year worse off, suggesting Hunt may be forced to intervene again this time next year.
Rebecca McDonald, at the anti-poverty charity the Joseph Rowntree Foundation, said growing numbers of households were already falling behind with their energy bills, and “going without the essentials they need”.
“The use of one-off payments to help with the cost of living may mitigate some of the looming disaster, but those who narrowly don’t qualify will be hit hard. This winter and beyond is still going to be a frightening obstacle course just to afford the essentials,” she said.
Rocio Concha, the Which? director of policy and advocacy, said the additional support for the most financially vulnerable and extension of the energy price guarantee would bring some much-needed relief, but it may still not be enough.
“It’s not just those on the lowest incomes who will struggle to afford higher bills – for example, people on lower-middle incomes who miss out on extra support will need to find close to £1,000 extra to cover their energy costs,” he said.
