As the UK reels from a gas shortage, experts have warned the rise in bills will hit people on Universal Credit the hardest of all in a “perfect storm”
Some 1.7million households face a £153-a-year rise in their energy bills in the same month as the Universal Credit cut.
Charities and experts piled pressure on Boris Johnson as the damning analysis showed the “perfect storm” double whammy to poor Brits from October 1.
Ministers have insisted they will not remove the price cap on energy bills after wholesale gas prices soared.
But the cap itself is being raised on October 1 – followed by the £20-a-week benefit cut biting for the first time between October 13 and November 12, depending on people’s payment date.
The Resolution Foundation said out of 4.4million households on Universal Credit, a staggering 40% are on pre-payment meters – compared to just 10% of families not on benefits.
Those customers will face a 13% or £153-a-year rise in the price cap – more than the £139 rise in the price cap more broadly.
RF chief executive Torsten Bell said it would be “mad” to steam ahead with the £20 cut at the same time as bills are hiked.
RF economist Jonny Marshall said: “Low income families are facing a cost of living crunch on several fronts this autumn with energy bills rising alongside wider price increases, while Universal Credit is also due to be cut by £20 a week.
“Around 15 million households are set to face higher prices next week when the energy price cap is raised.
“This will be particularly acute for low income families on Universal Credit, who are four times as likely as the rest of the population to be on pre-payment meters, and therefore face even bigger increases to their bills.”
Since the RF’s figures were compiled, the number of households on UC has risen to 5million with 4.2million receiving a payment, suggesting the number on pre-payment meters could be even higher than 1.7million.
Trussell Trust policy director Garry Lemon said: “Today’s news about soaring fuel prices underlines just how devastating the £20-a-week cut to Universal Credit will be for millions of families on low incomes.
Our research shows that more than 1.3 million people on Universal Credit already fear they’ll struggle to switch on the heating this winter if the UK government goes ahead with this cut – and worryingly, some 670,000 people say it’s very likely they won’t be able to afford to switch on their oven to cook hot food.
“These numbers could be even higher when combined with rising energy costs – but it’s not too late for the government to make a U-turn on the cut and ensure our social security system provides people with enough money to cover the essentials, like food and heating.”
Scope Executive Director of Strategy James Taylor said: “The unfolding energy crisis, combined with the price cap rise on 1 October will send many household bills soaring, and it is disabled families who will be amongst the hardest hit.
“There is a risk of a perfect storm this winter that will plunge many disabled families into extreme poverty.”
Steven McIntosh of Macmillan Cancer Support warned the energy bills hike would be “devastating” for cancer patients at the same time as a benefit cut.
He said: “A cancer diagnosis can put a huge strain on people’s finances – whether because they’re simply too ill to work, or encounter much higher costs for bills or travel while having cancer treatment.
“Our Support Line regularly receives calls from people who just don’t know how they will choose between paying for the additional heating or electricity they need, or putting food on the table. For them, and the tens of thousands of others like them across the UK, the news of energy price hikes will be devastating.
“It is utterly unconscionable that Universal Credit is being cut. We implore the Prime Minister to cancel the cut, and help to protect tens of thousands of people living with cancer from having to choose between eating or heating this winter.”
Shadow Business Secretary Ed Miliband said: “The Government must take all necessary steps to ensure stability for customers and do everything in its powers to mitigate the effects of this crisis on businesses and consumers.
“Yet it is making the squeeze on household finances worse by putting up taxes for working people and cutting Universal Credit.”
It came as two Tory grandees lost their bid to stage a last-ditch Commons revolt against the cut.
Former leader and DWP chief Sir Iain Duncan Smith, and Theresa May’s former deputy Damian Green, tried to force a vote in a debate on the pensions triple lock.
But the amendment was not selected by Speaker Lindsay Hoyle, who rules on whether such bids are relevant to the debate.
But asked how it would cope with the “double whammy”, Downing Street insisted the £20 a week cut in Universal Credit would go ahead as planned.
A Number 10 spokesman said the “uplift to Universal Credit was always temporary”.
It had been designed to “help claimants through the economic shock and the toughest period of the pandemic”, he added.
A Government spokesperson said: “Protecting consumers is our primary focus and will shape our entire approach to this issue. The Business Secretary is in close contact with the energy industry on the impact of high global gas prices, having met senior figures over the weekend, and hosted a roundtable with the energy industry and consumer groups this morning to speak further, and to plan a way forward.
“The uplift to Universal Credit was always temporary, to help claimants through the economic shock of the toughest stages of the pandemic. It’s right that the Government should focus on our Plan for Jobs, supporting people back into work and supporting those already employed to progress and earn more.
“The Warm Home Discount Scheme, meanwhile, supports over two million low income and vulnerable customers each year with their energy costs.”
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