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Energy bill support reduction could see 7million UK people fall into fuel poverty

The missing link: A quarter of households struggling with bills do not receive benefits or a state pension

More than seven million people will struggle to pay their energy bills once the energy price guarantee increases at the end of March, according to new research.

A report by the Social Market Foundation, in conjunction with Public First and Citizens Advice, says these people will be part of a “missing link” who will not be able to pay their bills, but will not qualify for additional government support.

In his autumn statement in November, Chancellor Jeremy Hunt announced that the price guarantee, which limits the price households pay for energy per kilowatt hour, would increase from £2,500 to £3,000 a year in April on the basis of the average energy consumption.

The £400 cost of living payment given to all households this winter will also end and will not be reinstated for winter 2023.

Hunt said it would extend support to people on benefits, pensions and other vulnerable groups – but SMF research indicates this will not cover everyone who needs help.

The missing link: A quarter of households struggling with bills do not receive benefits or a state pension

The missing link: A quarter of households struggling with bills do not receive benefits or a state pension

He predicted that 12 million households would face “crisis-level” energy costs, three-quarters of whom are currently receiving social assistance or a pension.

This means that 3 million households have to spend more than 10% of their income on energy, but they will not benefit from additional government support because they do not receive allowances or state pensions.

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Based on an average of 2.4 people per household, this means that 7.2 million people are in the “missing middle” of energy billing policy, many of whom have middle incomes.

Amy Norman, Senior Researcher at SMF, said: “High energy prices could be the new normal, but our current energy policies are not designed to help people with what could be a decade of painfully high bills. ”

“Our current approach means millions of people are being deprived of the help they really need.”

The report also says that while retirees will receive government assistance, some have less financial need.

Wealthy pensioner households will still receive assistance

According to the report, using the state pension alongside benefits to target support means that one in three households in the richest 10% will receive government support.

Dame Clare Moriarty, chief executive of Citizens Advice, said: ‘Shocking bills are pushing families who have never needed support before to seek help from Citizens Advice.

“Meanwhile, people who were already struggling are being dragged deeper into the red.

Government must come up with a clear plan to ensure those in need do not fall through the cracks of current support measures

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Dame Clare Moriarty, Managing Director of Citizens Advice

“With huge energy costs, it is absolutely vital that support continues to reach those who receive the benefits.

“But this research shows that the government must also come up with a clear plan to ensure those in need do not fall through the cracks of current support measures.”

The report calls for a longer-term approach to government support that can target aid more precisely to households that need it most, and voters are willing to accept higher taxation to fund it.

In July, 52% of people surveyed by the Social Market Foundation said they were in favor of support policies even if they led to tax increases. By October, that figure had risen to 64%.

There is also growing support for a government energy efficiency program, which would help insulate homes whose residents have low incomes. The cost would be around £27bn, generating annual savings of £3bn, according to the report.

The government this week extended a scheme offering grants to those who

Four in ten voters preferred this kind of help to be targeted at low-income people, while 54% said it should be available to everyone.

Cost of life

The report found that 14% of owners would not be willing to contribute at all and a further 23% would contribute no more than £250. Only 10% said they would be willing to contribute £3,000 or more.

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Daisy Powell-Chandler, energy and environment manager at Public First, said: “Cripple energy costs make the case for action on energy efficiency more than ever: we simply cannot allow it to continue wasting heat.

“A step change in policy is needed to better understand where the need is greatest and how to support and incentivize Britons to upgrade their homes – while getting financial support for families who need it now.

“Solving these problems won’t be cheap or easy, but the benefits will be countless: lower household bills, less poverty, lower government spending, job creation, better health outcomes, increased energy security, reduced carbon footprint and more comfortable homes.”

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