Some people could soon be spending more than half their income on energy bills

People already on low incomes will be spending an average 54 per cent of their income on heating and electricity from April, new figures have revealed.

Single-adult households living below the breadline will face a dramatic rise of 21 percentage points from 2020 – calculated after housing costs – when the energy price cap increases in three months’ time, according to Joseph Rowntree Foundation (JRF) analysis.

“The government cannot stand by and allow the rising cost of living to knock people off their feet,” said Katie Schmuecker, deputy director of policy and partnerships for JRF.

“Rising energy prices will affect us all, but our analysis shows they have the potential to devastate the budgets of families on the lowest incomes.

“The alarm is sounding loud and clear and the case for targeted support to help people on the lowest incomes could not be clearer.”

Lone parents and couples without children are also set to be hit hard as the energy crisis unfolds, spending around a quarter of their incomes on energy bills.

Everyone can expect an increase of between roughly 40 to 47 per cent in their fuel bills, the report said, but the impact will be far from universal. Middle-income households of all family types will be paying no more than eight per cent of their incomes on energy.

The flagship report also revealed that half a million more children are living in financial hardship compared to 2012, and they are experiencing hardship for longer. Nearly two million children in the UK were already living in very deep poverty before the pandemic, meaning their household’s income was an average £9,900 or less after housing costs, taxes and national insurance costs – or “so low that it is completely inadequate to cover the basics”.

Low-income families are “enduring a miserable winter of cuts to universal credit, soaring energy bills and the prospect of yet more price rises,” said Imran Hussain, director of policy and campaigns at Action for Children, in response to the findings.

“Families with children are among the hardest hit by this crisis as they typically face bigger bills, have smaller savings and are less able to take on extra work.

“It’s been clear from our services for many years that more and more families have been falling into deep poverty. The government has been in denial about high and rising child poverty and simply doesn’t have a strategy to tackle it.”

“Living in fuel-poor homes is linked to a higher risk of physical and mental health problems in children and can negatively affect their development,” Hussain added. “Before this crisis becomes a catastrophe, ministers need to take urgent targeted action for these families. The best way to help low-income families with children is by increasing the child element of universal credit and bringing the value of benefits up in line with the rise in inflation.”

Families with children are not only falling deeper into poverty but being trapped in it for prolonged periods of time, JRF researchers said, with Bangladeshi, Pakistani and Black families worst affected.

Roughly one in five children lived on a low income for at least three of the four years between 2016 and 2019. This increased to around one in three children for those in lone parent families.

“For many young children, this persistence of poverty means going without essentials is all they have ever known or can remember,” analysts said.

The organisation called for targeted support including an emergency, immediate payment for people on the lowest incomes to stop them falling into destitution when the energy price cap rises in April.

This is particularly important following the universal credit cut which left the benefit rates for people who are unable to work or looking for work “profoundly inadequate”, they noted.

“No childhood should be defined by a daily struggle to afford the basics,” Shmuecker said. “But the reality is that many children growing up today won’t have known anything else. The fact that more children are in poverty and sinking deeper into poverty should shame us all.”  

Targeted cash support “must go hand in hand with urgent action to strengthen our social security system, which was woefully inadequate even before living costs began to rise,” she added. 

“Our basic rate of benefits is at its lowest real rate for 30 years and this is causing avoidable hardship. The government must do the right thing and strengthen this vital public service.”