Rishi Sunak’s energy crisis package for low-income households is already out of date
Rishi Sunak last month merely claimed to be “taking the sting out” of the sharp rise in energy bills that will apply from the start of April. He was wise not to make a grander boast. Six weeks on, his £9bn support package, which in any case involved a fiddle with a £200 “rebate” that isn’t really a rebate because it is repayable later, looks grossly unequal to the size of the energy challenge.
The first problem is the one highlighted by Gordon Brown, the former prime minister, and more than 70 Labour local government leaders today: the number of households in fuel poverty, defined as those spending at least 10% of their net income on energy, will rise from 4.7 million to almost 8 million next month.
That figure, note, is calculated after adjusting for Sunak’s measures that offered straightforward support: the £150 reduction for council tax payers in bands A and D, for example, and the widening of the eligibility for the warm homes discount. In other words, the sting will still be severe for low-income households.
Brown and co suggest a series of responses, including capping next month’s national insurance increase, restoring the £20-a-week increase in universal credit and uprating benefits in line with inflation. All should be on the table in the spring statement.
The second problem, though, is potentially enormous: when the energy price cap is next revised in October, the mechanical model is likely to spit out a truly astronomical figure. Barring a rapid and miraculous plunge in wholesale gas prices, the next cap is currently projected by analysts to come out at close to £3,000. That would make April’s £1,971, seen as shocking when regulator Ofgem published it last month, feel almost gentle.
It’s obviously not Sunak’s fault
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