Households in ‘fuel stress’ to double overnight, warns think tank

The number of households in England under “fuel stress”, a term used for those spending at least 10 percent of their budget on energy bills, will double on Friday (1) and will escalate further, states a report citing UK’s prominent think tank which is calling for more support with energy bills.

From today (1), the cap on the most widely used tariffs imposed by Britain’s energy regulator are rising by 54 percent, implying energy bills for some 22 million customers will rise by an average of £693 to £1,971 a year from April 1.

According to the Resolution Foundation, another 2.5 million households are at risk of fuel stress in October if the price cap rises again to £2,500. The think tank estimates that a £500 rise in the price cap to £2,500 from October would see 32 percent, or 7.5 million, of all families in England fall into fuel stress.

Resolution Foundation added that some 24 percent of households in the north east of England are now in fuel stress, the highest in the country, a figure that could rise to 41 percent in October. The think tank’s report adds that low-income households will feel the tightest pinch, with the poorest fifth of households set to spend 10 percent of their budgets on energy bills, versus the richest fifth (4 percent).

The think tank added that the government’s Energy Rebate Scheme will limit the rise in low-income households’ spending on energy bills from 7 percent to 10 percent, rather than 12 percent.

However, it warns that support does not go far enough in protecting low-income households from rising energy bills, calling the scheme “deeply flawed”.

“While this policy is broadly progressive, it is not the most effective way of targeting support at low-income households,” the think tank said. “11 percent of the poorest fifth of households are ineligible for the rebate, because they live in Band E-H properties, while 59 percent of the richest fifth are eligible.”

Rising costs have united groups across the political spectrum — from the Institute of Directors to the Resolution Foundation — in criticism of Chancellor of the Exchequer Rishi Sunak for not doing enough to cushion the blow.