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Evening Standard
Evening Standard
Business
Simon Read

2.5 million families tip into ‘fuel stress’ as energy price cap rises

A homeowner turns down the temperature of a central heating thermostat

(Picture: PA Wire)

The number of people in “fuel stress” doubled overnight to five million because of April’s energy cap rise, according to a living-standards think tank.

From today, the price cap on a typical household energy bill has climbed 54%, leaping £693 to £1,971 a year.

The Resolution Foundation said the rise would double the number of people in fuel stress to 5 million overnight. People in fuel stress spend at least 10% of their household incomes on heating and lighting their homes.

The think tank warned that a further 2.5 million will fall into fuel stress come October if the next expected hike in the energy cap materialises.

October’s expected rise would mean that almost a third of all families in England would be experiencing fuel stress – 7.5 million households in total.

The impact could be even worse as that total is based on an estimated £500 increase in the price cap on 1 October, some way below the OBR forecast of a £830 rise.

Jonathan Marshall, senior economist at the Resolution Foundation, said: “Another increase in energy bills this autumn hastens the need for more immediate support.”

He called for a clear, long-term strategy for improving home insulation, ramping up renewable and nuclear electricity generation, and reforming energy markets so that families’ energy bills are less dependent on global gas prices.

Families living in poorly insulated homes will be hit most by rising energy prices, with their bills set to be £320 a year higher than those in similarly-sized better-insulated properties.

The Resolution Foundation said low-income households would have seen the proportion of their income spent on energy bills climb to 12% if it hadn’t been for the Government’s Energy Rebate Scheme, comprising a £150 Council Tax rebate and a £200 discount for all bill payers.

But it warned that the scheme’s design is deeply flawed and said the benefit system is a “far more effective route” to helping low-income households.

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