Some of the nation's poorest households risk missing out on a scheme targeted to shield them as the cost of living crisis in the UK worsens, it is feared. Back in February, the UK Government announced that around 20 million households in council tax bands A to D - including 95 per cent of rented properties - would benefit from a council tax rebate of £150.
But a living standard think tank fears that some of the nation's most vulnerable households will fall between the cracks and not benefit from the Government's £3 billion scheme. The Resolution Foundation, an independent think-tank focused on improving the living standards for those on low to middle incomes, has acknowledged that the Government’s Energy Rebate Scheme will go some way towards reducing the impact of the energy price cap rise on low-income households.
But the foundation warns that support doesn’t go far enough in protecting low-income households from rising energy bills, while the scheme’s design is 'deeply flawed'. As a result, the number of households experiencing ‘fuel stress’ – spending at least ten per cent of their total household budgets on energy bills – is still set to double overnight from 2.5 to 5 million households.
And with the price cap set to rise again on October 1, the number of families in fuel stress will continue to climb sharply unless further support is provided.
The think tank fears the scheme is not the most effective way of targeting support at low-income households. 11 per cent of the poorest fifth of households are ineligible for the rebate, because they live in Band E-H properties, while 59 per cent of the richest fifth are eligible. Poor households in London, where one-in-five of the poorest fifth of households live in Band E-H properties and are therefore ineligible for automatic support, are most likely to miss out, The Resolution Foundation said.
It also raised concerns that the council tax system doesn’t guarantee that the rebate will go to those paying higher energy bills, with many landlords paying their tenants’ council tax with no obligation to pass the rebate on, leaving their tenants to foot the higher bills.
Jonathan Marshall, senior economist at the Resolution Foundation, said: “Friday's energy price cap rise will see the number of households experiencing fuel stress double to five million. With the price cap expected to rise sharply again on October 1, a further 2.5 million households could fall into fuel stress this autumn, unless more support is provided.
“There are no easy ways to protect people from rising bills in the current climate. But with many of the poorest households missing out on the Council Tax rebate, this scheme should be used to supplement, rather than replace, support via the benefit system, which is better equipped to target lower-income families.
“Another increase in energy bills this autumn hastens the need for more immediate support, as well as 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.”
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