Hike in energy prices will disproportionately affect low-income families

Today’s announcement of a hike in the energy price cap is bad news for low-income families across the UK, many of whom are still suffering from the economic impact of the Covid-19 crisis. With over one-in-five families on Universal Credit already falling behind on essential bills, low-income families face a perfect storm of higher prices for essentials, an end to the planned £20 a week Universal Credit uplift, and the threat of rising unemployment, the Resolution Foundation said today (Friday), in response to the lifting of the Ofgem energy price cap.


Jonathan Marshall, Senior Economist at the Resolution Foundation, said:

“A rise in in energy prices will disproportionately impact those who are already struggling, with the extra proportion of budgets consumed by higher prices three times greater for those at the bottom of the income distribution compared with those at the top.

“Combined with the planned end to the £20 a week uplift to Universal Credit, which comes into effect in October, and rising inflation, this risks leaving many poorer families significantly worse off this winter.

“This is also the second price cap increase in six months, with a previous nine per cent increase in energy costs last April driven, like this one, by rising fossil fuel prices. Going forwards the Government must spearhead a successful, permanent switch to cheaper, renewable energy sources – ensuring that this switch is done in a way that minimises the impact on those already in fuel poverty, or at risk of falling into fuel poverty.

“In addition, policymakers must focus on widening the current warm homes discount scheme, reversing the removal of the £20 Universal Credit uplift, and identifying and offering targeted support to families at risk of falling into fuel poverty.”