Universal Credit: Claimants four times more likely to face energy bill hike after cut

BBC Breakfast: Dan grills James Cleverly over Universal Credit

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The Resolution Foundation is reporting that families receiving Universal Credit payments are four times as likely as the wider UK population to be impacted by the pending energy bill hike. This is due to benefit claimants being more likely to be on prepayment meters, which will therefore lead them to get larger bills. Concerns are continuing to grow among MPs and poverty campaigners about the Government’s plan to end the £20 uplift to the benefit payment, which is scheduled to be rolled back by the beginning of next month

Ofgem estimates that households will experience a 12 percent increase to their current energy bill amount from October 1, 2022.

This represents a rise of £139 a year to around£1,277 for the average gas and electricity customer in the UK.

However, prepayment meter customers will see an even higher bill of £153 a year, which is a 13 percent increase on their usual payments.

Prepayment customers are also more likely to be on variable rather than fixed rate tariffs, which means they will face a greater impact once the pending price rises hit

In response to this shocking statistic, the Resolution Foundation is calling on the Government to “do more to protect low-and-middle-income households”.

Specifically, the think tank is pushing the Government to rethink its proposed cut to Universal Credit, which it believes will exacerbate the country’s poverty levels.

Jonny Marshall, Senior Economist at the Resolution Foundation, outlined who will be most affected by the “double whammy” of the benefit cut and bill hike.

Mr Marshall said: “Low income families are facing a cost of living crunch on several fronts this autumn with energy bills rising alongside wider price increases, while Universal Credit is also due to be cut by £20 a week.

“Around 15million households are set to face higher prices next week when the energy price cap is raised.

“This will be particularly acute for low income families on Universal Credit, who are four times as likely as the rest of the population to be on prepayment meters, and therefore face even bigger increases to their bills.”

On top of his request for the Prime Minister to stop the cut to Universal Credit, Mr Marshall also called for the Government to make more benefit payments more readily available for struggling households.

“The Government must ensure that the cost and volatility of rising energy bills doesn’t fall entirely on households,” he explained.

“For example by making support schemes like the Warm Homes Discount more widely available to households, and maintaining the £20 a week uplift to Universal Credit

“In the longer term we can do more to protect low-and-middle-income households from volatile energy price shocks by ensuring the country is less reliant on imported fossil fuels with an extensive home efficiency retrofit scheme, while ramping up renewable energy generation and storage.”

On Twitter, the Resolution Foundation’s Chief Executive Torsten Bell broke down why these changes could not come at the worst possible time for the country.

Mr Bell said: “How do energy price rises and Universal Credit cuts interact? Badly…

“In October not only will those on Universal Credit see their incomes cut by five percent overnight, the energy price cap increases reflecting hikes in wholesale prices (the cap will increase again in the spring by £100s).

“The result: the autumn is looking like a cost of living crunch.

“Millions of households will see their energy bills rise by 13 percent at exactly the same time as their income falls by £1000 a year. And remember general inflation is likely to hit four percent this winter.”

Anyone concerned about how the Universal Credit cut and energy bill hike will affect their finances should reach out to Citizens Advice for further support.

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