Older people will face the greatest income squeeze from surging energy costs this winter but young people will struggle most to afford their bills, a report has found.
The Resolution Foundation’s Intergenerational Audit concludes over-75s are expected to spend 8% of their total household income on bills as they are more likely to live in larger and energy-inefficient homes.
But younger generations, who have seen years of stalled pay growth and high housing costs, will struggle the most as they are four times more likely to be on pre-payment meters and are less likely to have assets and savings.
But it’s younger people who are most likely to struggle to pay rising bills, because they are less likely to have savings to fall back on— Resolution Foundation's Molly Broome
Middle-aged households – ranging from 40 to 64-year-olds – will see the largest increases, with typical annual energy bills rising by over £1,000 on pre-crisis levels, to between £2,200 and £2,400.
The report found that even with Government support, the typical household energy bill will be 83% higher in 2022-23 compared to pre-crisis levels.
It also concluded those aged between 40 and 64 are set to benefit the most from cost-of-living support measures announced this year because cuts to national insurance contributions do not benefit those over the state pension age.
Molly Broome, of the Resolution Foundation, said: “All generations are facing difficulties from the growing cost-of-living crisis – but different generations are experiencing it in very different ways.
“Energy bills are set to rise by over 80% this winter, compared to pre-crisis levels.
“The middle-aged will face the largest bill rises and older generations will see the greatest squeeze on their incomes due to their larger and less energy-efficient homes.
“But it’s younger people who are most likely to struggle to pay rising bills, because they are less likely to have savings to fall back on – and will therefore be forced to either rely on older friends or family members, or potentially go without heating during the coming cold weather.”
A spokesperson for the Department for Business, Energy and Industrial Strategy said: “The Government’s energy price guarantee will save the typical household around £700 this winter, based on what energy prices would have been under the current price cap – reducing bills by roughly a third. This comes in addition to £1,200 direct payments to vulnerable households.
“A Treasury-led review will consider how to support households from April 2023, focusing support for those in need while reducing costs for the taxpayer.”
