Millions of households will be plunged into fuel poverty today caused by the uplift to the cap on energy bills sending the average household annual energy bill close to £2,000, reveals fresh research published today.
Some 2.5m households in England have fallen into fuel poverty due to the energy watchdog, Ofgem, raising the price cap £693 today, according to the economic think tank the Resolution Foundation (the Foundation).
Oil and gas prices soared during the second-half of last year, driven by scarce supplies running into soaring demand triggered by countries emerging from Covid-19 curbs, prompting the watchdog to raise the cap to account for higher wholesale energy prices.
However, bills are set to climb again in October as a result of Russia’s invasion of Ukraine pushing oil and gas prices even higher this year.
The Foundation estimates another 2.5m households will be plunged into fuel poverty in October after the regulator lifts the cap again to bake in higher wholesale energy costs.
Government support in the form of a £150 council tax rebate and a £200 discount for all energy bill payers will partially cushion the financial hit to households.
However, chancellor Rishi Sunak is likely to ramp up support in the coming months due to the existing package being eroded by further hikes in energy prices, the Foundation said.
Sunak has been criticised for failing to target low-income households at last week’s spring statement.
Poorer households in London are at risk of missing out on the benefits of the existing package due to a large proportion of this group living in properties in the capital that are not eligible for the council tax rebate.
“Another increase in energy bills this autumn hastens the need for more immediate support,” Jonathan Marshall, senior economist at the Foundation, said.
“A further 2.5 million households could fall into fuel stress this autumn, unless more support is provided,” he added.