Britain’s poorest households risk spending almost half of their disposable income on gas and electricity bills this winter despite the government’s energy price guarantee, according to a report.
The Progressive Economy Forum (PEF) said the poorest tenth of families could face bills amounting to 47% of their disposable income this winter, even after the support from Liz Truss’ energy price guarantee is taken into account.
The analysis comes as the chancellor, Kwasi Kwarteng, prepares to use his mini-budget on Friday to launch sweeping tax cuts targeted at middle and higher-income workers on top of the energy price freeze in a support package worth more than £150bn.
Average energy bills will be frozen by the government at £2,500 for a typical family from October for the next two years, in an intervention launched by Truss in her first week as prime minister to shield rich and poor alike from soaring costs.
However, the government has faced sharp criticism for failing to provide targeted support for the poorest households as the cost of living emergency hits those on low incomes harder than for wealthier individuals.
According to PEF, a household on average income is forecast to spend a third of their disposable income on energy bills, almost double the 17% they paid in 2020. But households in the top 10% will be paying only a fifth of their disposable income towards energy costs.
Highlighting the risks for the most vulnerable in society, it said the share of income spent by the poorest tenth of families on their energy bills would more than double from 23% in 2020 to 47% this year.
The estimates, produced using government figures for household consumption, include the effects of the blanket energy price guarantee and £400 energy rebate for all households.
In addition to the freeze on bills and energy rebate, the government will pay £650 to 8 million households on means-tested benefits, with extra help for pensioners and those with disabilities.