Families suffering from ‘fuel stress’ set to treble

The Resolution Foundation has warned that the number of households suffering from ‘fuel stress’ is set to treble overnight to 6.3 million households when the new energy price cap comes into effect on 1 April.

The research shows that the proportion of English households in ‘fuel stress’, spending at least 10 per cent of their family budgets on energy bills, is currently nine per cent. It is expected to leap to 27 per cent as a result of the energy price cap rising by more than 50 per cent this April to around £2,000 per year.

Levels of fuel stress are set to be highest in the North East and the West Midlands (33 and 32 per cent), among pensioner households (38 per cent), among those in local authority housing (35 per cent) and among those in poorly insulated homes (69 per cent of families in homes with an EPC F-rating).

The Resolution Foundation says that the most effective way to support lower-income families is through the benefits system, with a faster-than-currently-planned uprating of benefits in April (benefits are set to rise by 3.1 per cent). Alternatively, an additional payment based on the Warm Homes Discount (WHD) could be pursued. A new vastly improved WHD would cut the number of households living in fuel stress by around five percentage points – equivalent to over one million families.

Jonny Marshall, Senior Economist at the Resolution Foundation, said: “Rising gas prices are causing energy bills to soar, and will see the number of families suffering from ‘fuel stress’ to treble to more than six million households this summer. Fuel stress levels are particularly high among pensioner households, and those in poorly insulated homes – a stark reminder of the need to modernise Britain’s leaky housing stock and curb national dependency on gas for power and heating.

“The government can take action by targeting support at lower income households via benefits or a bigger and broader version of the Warm Homes Discount. They should also temporarily transfer the cost of environmental levies onto general taxation, as well as spreading the cost of supplier failure over three years.

“While not cheap at £7.3 billion, this plan is affordable, and by cutting bills by up to £545 would help prevent the upcoming rise in energy bills turning into a cost of living catastrophe for millions of families.”