The cost-of-living crisis is already taking its toll on many of us. But it’s people on the lowest incomes being hit the hardest.
Price hikes due in April are predicted to push an additional 2 million more households into fuel poverty, bringing the total to 6 million. Even before the price rise takes effect, our frontline advisers have said it’s the worst they’ve ever seen.
In the last three months of 2021, we helped one person every 40 seconds with a fuel debt issue – 40% more than compared to the same period in 2020. With further rises to the price cap over the course of the year, we’re expecting the winter of 2022 to bring even heavier blows.
Immediate action is needed to protect people making impossible choices between heating and eating right now. But the government also needs a longer-term plan for properly addressing the soaring cost of living.
There are four key steps the government should take to meet the challenges of the coming year:
- Increase benefits uprating in April to reflect current inflation: The government should base the uprating figure on the latest available inflation figures – either the Bank of England forecast rate or the March 2022 rate. This will help to ensure people on the lowest incomes aren’t left financially adrift.
- Provide a one-off payment to people on low incomes: This should be made to all low-income households in receipt of Universal Credit, legacy benefits and Pension Credit in April 2022. In the short term, this will help people already struggling.
- Expand the Warm Home Discount for next winter: Temporarily extending this scheme would channel money directly to people who need it most, enabling them to stay warm next winter. The discount should be increased in value based on modelling of future prices and expanded to reach more households at risk of fuel poverty. The government should also increase the part of the scheme that allows energy companies to provide extra financial assistance to people they identify in need of support.
- Spread the cost of supplier of last resort (SoLR) levy: If customers pay off the majority of the Supplier of Last Resort levy fund from April 2022, it would add £94 to bills over and above planned hikes. Spreading the costs over a longer period would act as a short to medium-term stabiliser which could provide some relief to customers.
With these measures, the government can address the most pressing aspect of the cost of living crisis, protecting people from falling into poverty and enabling us all to stay warm this winter.