Government assistance will shield poorest from bill hikes

The emergency support packages announced by the government so far this year will largely shield lower-income households from increased energy bills, according to the Resolution Foundation.

The think tank, which monitors cost-of-living issues, has updated its analysis of the Treasury’s financial aid, the latest of which was unveiled on Thursday (27 May).

Resolution Foundation said the three sets of measures chancellor Rishi Sunak has announced so far this year to alleviate increased cost-of-living pressures, will largely offset 2022/23’s rise in energy costs.

Households in the bottom three income deciles, the poorest 30%, will see 93% of their increased energy costs offset, it said.

This analysis takes into account the two energy packages announced in February and on Thursday, combined with changes to tax rates in March’s spring statement.

Thanks in large part to the latest lump sum payment of £650 to low-income households, combined with top ups for pensioners and disabled individuals, the foundation said the benefits of the three announcements are skewed towards the poorest.

Taking into account tax increases in March’ spring statement, the average cash gain to households in the bottom 20% is £1,195, while those in the top fifth are set for an average cash loss of £456.

The foundation also highlighted the further relief that many low-income households will receive next April following the chancellor’s confirmation that the government will follow its usual rules for uprating benefits, meaning that most universal credit recipients and pensioners will pocket a 9.5% increase.

And it said that the nature of support will become more progressive next year if there is no continuation of the £400 energy bills discount, which goes to all households.

The foundation also said that while two thirds of disabled individuals live in the top half of households by income, their £150 top up payment reflects some of the additional costs they tend to incur.

Paul Kissack, chief executive of the Joseph Rowntree Foundation, said that the chancellor’s statement will offer “very welcome relief” for hard pressed households.

He said: “It is right to target help at those on low incomes, who are least able to bear the shock of soaring energy bills.

“We are pleased by the commitment to uprate benefits in line with inflation as usual, though it is still crucial that the government invests on an ongoing basis in ensuring that everyone can get through difficult times and afford the essentials.”