Although this year’s cost of living crisis brings bad news for almost everyone, it is those on low to middle incomes for whom it poses a totally unmanageable challenge. Almost 2 million English households are on course to be in severe fuel stress (spending more than £1 in every £5 of their household budget on energy) this winter, up from just 325,000 last winter.
Targeting support at lower-income households, who do not have the coping strategies available to them that higher-income households use to manage rising energy bills, is therefore the key task for policy makers in the face of an energy price spike. To date policy has failed in this task – and no tax cut can answer this question.
Putting in place that support at short notice, outside of the normal cycle of benefit upratings, is far from straightforward. But it can be done, with the Chancellor having a range of options for delivering it. It would best be provided via the benefits system, with an emergency uprating of benefit levels or, more likely if all pensioners are to be included, a system of one-off payments this Autumn.
The unprecedented scale of the crisis to come, and the degree to which support has not been targeted at poorer households to date, means that the Chancellor will need to announce a significant package of £10-15 billion to make a major dent in the increases in destitution and debt that lie ahead of us this winter. This would mean payments averaging up to £1,000 for the 15 million households receiving the state pension or means-tested working age benefits. Reflecting higher energy usage, payments should be higher for those with a disability or large families.