Rising energy bills expected to take up large share of benefits

The anticipated £700 increase to the default tariff cap is set to put energy bills as a proportion of benefit levels at a generational high, new research has revealed.

Citizens Advice analysed energy tariff data against historic benefits levels going back twenty years.

It estimated that April’s anticipated increase as a result of high wholesale energy costs will leave a single adult spending a third (33%) of their standard allowance – the basic rate of Universal Credit – on energy bills. In contrast, the proportion in 2021 was 18%.

The charity additionally expects the cap to increase by a further £200 in October, meaning the proportion could reach 37%.

It estimated that an additional 600,000 customers who are currently on cheaper fixed rate tariffs will see their bills rise by £150 when their fixed rates end in the summer.

To mitigate the impact of soaring costs, the charity recently proposed a package of support which it urged the government to bring forward to help consumers pay their bills.

This included a one-off energy support grant to be paid through the benefits system in April, equivalent to the winter fuel payments which are already paid automatically to pensioners each year, as well as an additional payment to low-income retired households in receipt of Pension Credit.

It further called for the Warm Home Discount to be temporarily extended and increased to a level based on the most up-to-date government modelling of future price increases.

Clare Moriarty, chief executive of Citizens Advice, said: “These figures confirm what we’re already seeing through our frontline services. Energy costs are eating into budgets and it’s families on the lowest incomes who’re feeling the biggest squeeze.

“With further hikes set to push bills to a generational high, disaster is on the horizon if the government doesn’t act.”