Both the National Energy Action (NEA) and the Social Market Foundation (SMF) have said that over seven million households face the risk of fuel poverty come April 2023 prompting calls for politicians to provide “workable long-duration policies”.
The NEA has estimated that around 8.4 million UK households will be in fuel poverty from April 2023. The SMF also suggested that 7.2 million will struggle to pay energy bills from April 2023. This is primarily due to the Energy Price Guarantee now set to cap average energy bills at £3,000 from that point onwards, up from the current £2,500.
This change could plunge many UK households into fuel poverty. However, with governmental intervention, more targeted financial support could be key in mitigating the impact of the energy crisis on the millions of UK households currently at risk. SMF also indicated that a major drive to insulate Britain’s homes could cut the nation’s energy bills by “tens of billions of pounds”.
“High energy prices could be the new normal, but our current energy policies aren’t set up to help people with what could be a decade of painfully high bills. Our current approach means millions of people are missing out on the help they really need,” said Amy Norman, senior researcher at the Social Market Foundation.
“Politicians of all parties should come together to develop workable long-term policies that get help to the people who need it most. That means developing new systems to identify people in need and get help to them: the public sector today simply lacks the tools needed to make sure money to help with energy bills is going to the right places.”
Changes to the Energy Price Guarantee had been confirmed within the Autumn Statement in mid-November in which the scheme, originally scheduled to end in April 2023, would run until April 2024 and increase the average cost of a households energy bill from £2,500 to £3,000 from April 2023 onwards.
According to Cornwall Insight, without the Energy Price Guarantee a typical household could expect to pay £3,739 p/a from April 2023, based on a standing charge of £0.37 for electricity and £0.31 for gas, and a unit rate of £58.35 for electricity and £15.01 for gas.
The extension of the Energy Price Guarantee is a positive for households with additional support being maintained for the duration of the energy crisis however this increase could plunge much of the UK into fuel poverty.
Adding to this, the Energy Bills Support Scheme (EBSS), which provides £400 of targeted support to households in a bid to reduce the cost of their energy bills, will cease in April and will move to target the most vulnerable households. This transition neglects many of those in need of this additional support and as such, now face a 40% increase on current prices. This would mean energy prices will have more than doubled in 18 months, the NEA said.
Of those to be affected by these changes are 1.8 million carers, 5.9 million low income and financially vulnerable households, 3.6 million people with disabilities and 1.6 million households in off-gas homes who will all face fuel poverty in the new year.
“This winter has already been bleak and next year is set to be even worse. With Government support being reduced and energy bills spiralling yet again in April, one in three households will be in fuel poverty,” said Adam Scorer, chief executive of National Energy Action.
“That means many of them will be forced to bed wearing coats, rationing showers and hot water, it means running up huge debts or self-disconnecting and going cold. Millions of the most vulnerable – carers, people with disabilities, those on low incomes and living in inefficient homes – are already bearing the brunt this winter. The situation will continue to get worse next year.
“The effects of this are devastating on both physical and mental health. Make no mistake, cold homes can kill. Government intervention must prioritise the most vulnerable in 2023 and beyond.”
SMF and Public First have released data that indicates 12 million households are set to face crisis-level energy costs due to the Energy Price Guarantee changes. Of this, 3 million households who would face paying more than 10% on their income on fuel, will not receive financial support from the government.
These startling figures paint a grim image for low income households in the UK. With the energy crisis to continue for the foreseeable future, Energy and Climate Intelligence Unit (ECIU) has unveiled the impact the crisis will have had by the time the Energy Price Guarantee ends.
The organisation stated that from the beginning of the wholesale gas crisis to the end of the newly extended Energy Price Guarantee initiative, gas will have added £4,400 to the average household’s energy bill.
High wholesale gas prices are predicted to add £2,499 to gas bills between the start of the crisis and the end of April 2024, while the additional expense of running gas power stations is set to have inflated average electricity bills by around £1,895.