New analysis from the Joseph Rowntree Foundation finds households on low incomes will be spending on average 18% of their income after housing costs on energy bills after April.
For single adult households on low incomes this rises to a shocking 54%, an increase of 21% percentage points since 2019/20. Lone parents and couples without children will spend around a quarter of their incomes on energy bills, an increase of almost 10% in the same period.
The analysis compares the household spend on gas and electricity bills of several different family types on low and middle incomes between 2019-20 and after the increase due in April this year.
While there is little difference in the overall increase in bills from April, with all households facing an immediate increase of between around 40% and 47%, the difference in the proportion of household incomes these increases will represent is stark. Middle-income households will be spending on average 6% of their incomes on energy bills.
The figures were released alongside the Joseph Rowntree Foundation (JRF) state-of-the-nation report, which revealed that around 1.8 million children are growing up in very deep poverty, meaning the household’s income is so low that it is completely inadequate to cover the basics. This represents an increase of half a million children between 2011-12 and 2019-20.
The longer a family spends living on an income that doesn’t cover their basic costs, and the lower that income is, the worse the consequences. People in this situation are likely to find it difficult to adequately heat their home, feed their family or provide the most basic items like clothing and furniture.
The report also finds that people in poverty are less likely to have savings that can act as a buffer when costs go up. Just over a third of people in poverty have liquid savings of less than £250 compared with one in six of the overall population. Recent JRF research found that around 3.8 million households are in an estimated £5.2 billion of arrears with household bills, a number that has tripled since the pandemic hit.
Following a cut to Universal Credit in the autumn, the level of support for people who are unable to work or looking for work remains profoundly inadequate. JRF is calling for an immediate emergency payment for people on the lowest incomes to help prevent hardship in the months ahead.
Katie Schmuecker, Deputy Director of Policy & Partnerships at JRF, said: “Rising energy prices will affect us all, but our analysis shows they have the potential to devastate the budgets of families on the lowest incomes. The Government cannot stand by and allow the rising cost of living to knock people off their feet. The alarm is sounding loud and clear and the case for targeted support to help people on the lowest incomes could not be clearer.”
Credit Union Director Francois Jarrosson added: “We are already seeing the impact of the rising cost of living, as more and more people turn to us for help. We know that often those on the lowest incomes have little in the way of savings for unexpected bills and, with energy costs likely to rise significantly from April, it will be impossible for many families to make ends meet without urgent Government support.”
Help and advice
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