Over seven million families in England are set to grapple with higher energy bills this winter, despite the Ofgem energy price cap dropping to £1,923 for the typical household starting this October. This unsettling reality emphasises the urgent need for further government assistance to support financially strained families, says the Resolution Foundation.
Price cap reduction vs. rising charges
They point out that the forthcoming price cap represents a nearly £200 decrease for an average household compared to last winter’s effective cap of £2,100. This reduction is down to the introduction of the £2,500 Energy Price Guarantee and a £400 energy bill rebate.
Yet, while the price per unit of energy is going down, it will be offset by an increase in the daily standing charge and the end of the £400 payment. As a result, while those who use the most energy will see the biggest reductions in their bills, those using less energy than an average household will likely receive higher bills this winter compared to the same period last year.
Impact on households
The Resolution Foundation’s analysis using the new Ofgem price cap data shows that over a third of households – equivalent to 7.2 million across England – will face higher bills this winter compared to last year. This increases to nearly half among the poorest households in England.
One in eight households – around 2.8 million – will find their winter energy bills increasing by £100 or more this year. This rises to nearly a quarter of the poorest families.
While many of them will receive support through cost-of-living payments this winter, there will be some who won’t, and the scheme is scheduled to end next spring. This highlights the pressing need to introduce a new social tariff for energy bills targeting financially challenged households – a proposal the government had previously consulted on last spring but has since made no progress.
Reducing vulnerability to gas prices
The Resolution Foundation urges the government to reduce British families’ exposure to volatile gas prices by promoting better home insulation and expediting the transition to heat pumps.
Senior Economist at the Resolution Foundation, Jonny Marshall, commented on the situation, saying, “Falling wholesale gas prices have finally brought the energy price cap down below £2,000. However, this is still over 50% higher than families were used to before Russia invaded Ukraine, while the end of the £400 universal payments and rising standing charges mean that over one-in-three families across England will face higher bills this winter than last.”
“At a time when inflation is still sky-high, with almost three million households set to see their bills rise by over £100, the Government must up its game in providing longer-term support for hard-pressed families with a new social tariff for energy bills.”
For more on the outlook for energy bills this winter, read Gotta Get Through This by Jonathan Marshall and Emily Fry.
By East Anglia Bylines from a press release by the Resolution Foundation
