Millions of households will spend almost a third of their income on fuel by spring

Millions of households will pay nearly a third of their income in fuel costs this spring, amid warnings that a ‘black hole in supply’ remains for Britain’s poorest families.

The vast majority of households in certain vulnerable groups – including around 70% of pensioners – will spend a tenth or more of their income on fuel from April, when energy cost support is reduced.

However, the number of households spending 30% or more of their income on fuel will double from April, from 1.6 million to 3.8 million. The number of households spending a fifth of their income on fuel is expected to increase from 3 million to 7.5 million. Overall, two-thirds of UK households will spend 10% or more of their income on fuel over the next six months.

The figures were produced by York University’s Social Policy Unit for a pamphlet written by former Prime Minister Gordon Brown, who warned that “the scale of the increase is staggering” and that a ” black hole in supply’ remained.

He called on Prime Minister Rishi Sunak and Chancellor Jeremy Hunt to raise more funds from people without tax status and banks to fund more support for people in need.

“People are worse off and 2023 will be worse than 2022,” Brown told the Observer. “People are going through these winter months, I’m afraid, knowing that things are going to get worse after April. You have to provide a higher level of heating assistance than it is now.

“Why hasn’t the government done anything about non-domiciles? Why didn’t they do anything about banker bonuses? Why haven’t they done anything for the city in general? Obviously, there is a huge inequality between the position of these privileged people and that of the people who suffer.

The Government’s Energy Price Guarantee (EPG) currently caps typical energy bills at £2,500 until April and is being extended for a year. However, from there the cap will increase to £3,000 based on average usage. The new figures suggest that the impact of energy costs should be felt strongly.

Brown said 2023 was shaping up to be a year of far worse hardship across the UK than 2022. “Going from the hardships of October to even more austerity in April will be very painful for the majority of families,” writes he in a forthcoming pamphlet titled How To Survive This Winter. It is designed as a guide for grassroots organizations trying to fill holes in the social safety net.

The new figures suggest that pensioners will be hit hard, with more than 70% spending 10% of their income on fuel – considered by some to be the benchmark for fuel poverty. However, an astonishing 96% of single-parent families with two or more children and more than 85% of all couples with three or more children will be in the same situation by April.

It comes amid growing evidence that poorer people have to pay more for essential services than wealthier households. Almost 7 million of Britain’s poorest people pay extra for these basic goods and services. This ‘poverty premium’, comprising areas such as the price of credit, pre-paid meters and smaller quantity purchases, could cost these families around £480 a year, according to research by the Center think tank for Social Justice (CSJ).

It revealed that a third of low-income households pay more for their electricity because they use prepayment meters or pay on receipt of a bill, compared to 20% of all households. They are twice as likely as the average family to shop at more expensive small supermarkets. About 29% of those who pay at least a poverty premium say they skip meals to buy fuel.

The CSJ is proposing a series of reforms to address the problem, including ensuring access to free ATMs in poorer communities.

Former Tory leader Iain Duncan Smith said there was ‘something deeply disturbing about those who have the least having to pay more than those who have the most for basic necessities’.

The Treasury said: “This winter we are spending £55billion to help households and businesses pay their energy bills – one of the biggest support plans in Europe. To support the most vulnerable from April next year, we have announced a cost of living payment of £900 for those on means-tested benefits, £300 for retired households and £150 £ for people receiving invalidity benefits.

“This is on top of the Energy Price Guarantee, which is set to provide an average of £500 in support to households across the country from April, and an additional £1billion in funding for a further extension. 12-month Household Support Fund, helping those who might otherwise fall through the cracks.

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