Cost of living to bite hardest in spring with an extra 1m households with children plunged into fuel poverty

More than 2.2 million households with children will struggle to pay their electricity and gas bills when the energy price cap rises again in April, according to the Fuel Poverty Coalition.

This is a rise of 74 per cent from 2019 when around 1.2m children were living in fuel poverty.

Labour’s Ed Miliband said families had been left to struggle due a “decade of policy failure” by the Conservatives.

The campaign group warned fuel bills will rise by as much as £900 this year as the cost of wholesale gas and electricity soars and the price cap is hiked, plunging the UK deeper into the “national crisis”.

A review of the price cap, which is the maximum amount that energy suppliers can charge for the unit rate of gas and electricity, will be completed in February and a rise will come into force on 1 April.

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: “The figures make for grim reading.

“That so many parents are having to make the choice between keeping the heating on and feeding their kids is heartbreaking.”

It comes as a new think tank report from The Resolution Foundation warned the number of families spending at least 10 per cent of their budget on fuel bills will triple later this year from nine per cent to 27 per cent of households.

This would equate to 6.3 million households suffering “fuel stress” – an indication bills are unaffordable – with the North East and the West Midlands hardest hit.

Nimesh Shah, chief executive of tax and advisory firm Blick Rothenberg, urged the government to reinstate the £20 uplift to Universal Credit and postpone to rise in National Insurance Contributions (NIC) to help poorer families cope with the rise in energy prices and other inflationary pressures on everyday spending.

Inflation has also been soaring month on month with families forking out more for their petrol, food and clothes.

“The government needs to seriously think about reinstating the £20 uplift to Universal Credit which would give the poorest families £500 cash over the next 6 months,” said Mr Shah. “They should also go one step further by cancelling (or least delaying) the NIC increase for those earning lower than the higher rate of income tax.

“Households are facing energy price rises of up to £700 in the Spring, and although wages have increased significantly, they are not keeping up with rising costs. Not just energy price rises but inflation in general. The Bank of England is expecting the inflation rate to reach around 6 per cent by spring 2022.”

Families with high levels of debt will also be hit by the Bank of England’s recent increase in the base rate to 0.25 per cent, from 0.1 per cent.

Mr Shah added: “Again, this will hit families with mounting debt as they see borrowing costs increase. The intention from the Bank of England to reduce inflation through an interest rate increase will take time to come through into the system.

“There is also pressure on the Government to make domestic fuel costs zero-rated for VAT – but this would only provide households with an annual saving of around £100.

“This is not enough to make a real difference to those in greatest need,” said Mr Shah. “Those who would gain most are those with the largest houses and highest heating bills.”

Shadow business secretary Mr Miliband said the Government’s refusal to follow Labour’s plan to introduce a one-off tax on energy companies to fund subsidies for families “tells you all you need to know about the priorities of this government.”

He told i: “It tells you all you need to know about the priorities of this government that they refuse to levy a windfall tax because they say oil and gas companies are ‘struggling’.

“The truth is that it is the families of Britain who are facing the appalling struggle to pay their bills after a decade of failed Conservative energy policy.”

Mr Miliband added: “Labour will stand up for the millions of families across the country who are deeply worried about the energy price rises they are facing.

“Our plan will tackle the deep insecurity so many are facing and save all households around £200, with up to £600 of support for 9m of the lowest earners, pensioners and the squeezed middle.”

Director of Policy and Advocacy at National Energy Action Peter Smith told i: “It’s heart-breaking to see the number of children who could be in fuel poverty if there is a massive energy price cap rise in April.

“It will be an exceptionally grim time for families, in particular, for single parents. Children living in cold homes are more than twice as likely to suffer from asthma or bronchitis and almost 100% more at risk of suffering from breathing problems at night. We’re really worried these impacts will get much worse and some could continue over their whole lifetime.”

Disability equality Scope warned that disabled people are also being affected with 44 per cent worried that they cannot afford their fuel bills.

“Life already costs more for disabled people and their families, and we are facing rising inflation and the biggest income squeeze in a generation,” Tom Marsland, policy manager at disability equality charity Scope told i.

“The UK Government must urgently get financial support to all those who need it most,” he added.

The figures are “yet another alarm bell in the cost of living crisis,” the Joseph Rowntree Foundation said, hitting “poorest families the hardest.”

“The case for targeting support to people on the lowest incomes could not be clearer or more urgent,” Katie Schmuecker, Deputy Director of Policy & Partnerships at the poverty charity told i.

“Our basic rate of out-of-work benefits is at a 30 year low and people are struggling to afford the basics. The Government must do the right thing and strengthen this vital public service.”

A Government spokesperson said it will “continue to look closely” at “abating high energy costs.”

“We recognise people are facing pressures with the cost of living, which is why we are taking action worth more than £4.2bn,” they said.

“We’re putting an average of £1,000 more per year into the pockets of working families on Universal Credit, increasing the minimum wage by 6.6 per cent and supporting vulnerable households through initiatives such as the £500m Household Support Fund, Warm Home Discount, Winter Fuel Payments and Cold Weather Payments.

“The Energy Price Cap is currently insulating millions of consumers across the UK from high global gas prices. But we’ll continue to look closely at the pressures facing people and what further measures might be needed on abating high energy costs.”

Source: i on MSN