Gaping £1,000 gap for worst-off families as energy price cap rises

Call for extra £1,500 for families and 18% social security rise

Low-income families will have an estimated £1,000 shortfall for energy costs alone in the year to April 2023, if as expected Ofgem’s price cap rises to £3,554 in October, new analysis from Child Poverty Action Group (CPAG) shows. An announcement on the new cap is due tomorrow.

Average energy expenditure is 30% higher for families with children than for households without kids CPAG calculates*.

The Government’s cost of living support package typically amounts to only £1200** for qualifying households on means-tested benefits and consists of flat rate payments – taking no account of the extra costs when there are children in a household – yet energy bills for families with children are likely to rise by an estimated £2,200,*** on average in 2022-2023 (leaving a £1,000 gap), the analysis shows. Energy bills for the average family with kids are on course to reach £3,600 in 2022/23

Average energy bills for households without children are expected to be £1,700 higher in 2022-2023 than the year before.

Energy bills are just one component of the living costs crisis families are facing. Last week ONS statistics showed that the cost of food has risen by 12.7% **** and the IFS now estimates that the poorest households (who spend a larger share of their income on food and on energy) are facing an inflation rate of 17.6%. *****

With 4 million children already in poverty and a desperately difficult winter ahead, CPAG says the Government must act now to strengthen support for families with children to recognise the additional financial pressures they are facing. The charity is calling for:

An increase in cost of living support to ensure families have enough to cover their energy and other costs this winter. If the new price cap is £3,554 in October (and £4,650 in January) this would mean at least an additional £1500 for families with children and £700 more for households without children.
An 18% increase in benefits this April in line with the rising cost of living that lower income families are actually facing

Chief Executive of Child Poverty Action Group Alison Garnham said:

“With a £1,000 shortfall just for energy bills, many struggling families will fall through the ice this winter unless the Government makes more help available fast. Over the next few months families will need extra support that covers their costs and reflects family size, and social security must rise to match inflation from April. Four million children are already in poverty with many others now perilously close to it. Leaving their families to sink cannot be an option.”

Notes to Editors:

* The percentage more that households with children spend than households without children is calculated from Disposable income and energy expenditure for different fuel type households and household types, UK: financial year ending 2018, Office for National Statistics, 2020 and Share of households with children calculated from Households Below Average Income 2019/20, Department for Work and Pensions, 2021

** The £1,200 Government support package includes a £200 Energy Bills Support Scheme payment to all households with a domestic electricity meter, a £150 Council Tax rebate, England Bands A-D, a £200 additional Energy Bill Support Schemes payment to all households with a domestic electricity meter and a £650 for households on means-tested benefits

***The average annual energy expenditure for 2021/22 and 2022/23 is calculated from https://www.cornwall-insight.com/cornwall-insight-release-final-predicti...

To estimate what this level would be for households with children we have calculated the percentage more that households with children spend on energy than the average using Disposable income and energy expenditure for different fuel type households and household types, UK: financial year ending 2018, Office for National Statistics, 2020 and applied this to the forecast average energy cost for households in 2022/23.

****https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consum...

**** https://ifs.org.uk/publications/16150

CPAG media contact: Jane Ahrends 07816 909302