People living in poverty ‘hit harder by gas and electricity bills’, new data shows

Ministers accused of ‘leaving working families to pay the price for’ energy crisis

Sam Hancock
Sunday 24 October 2021 22:30
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Related video: Business secretary defends government handling of energy crisis

Poorer households have been found to pay as much as 50 per cent more on their energy bills than those with more money, according to data analysed by the Labour Party.

The figures show Britain’s poorest 10 per cent of households pay on average £756 a year per person for electricity, gas and other fuels. This is compared with an average of £504 per person in the richest households, as well as a national average of £530.

It was also revealed that those living in poverty pay a significantly higher proportion of their household budget on energy bills, with the poorest households spending around seven times as much of their funds on energy as the richest households, and three-and-a-half times the national average.

After the figures were published on Sunday night, Wes Streeting, shadow child poverty secretary, accused the government of “leaving working families to pay the price for the chaos in our energy sector”.

“Boris Johnson ought to be getting a grip on the cost-of-living crisis, but instead he’s making it worse with his jobs tax and the £1,000-a-year cut to Universal Credit,” he said.

Talking up the party’s proposals to curb the effects of the UK’s energy crisis on its poorest people, Mr Streeting said Labour were demanding ministers “urgently cut VAT on domestic energy bills for six months, to help people through this winter”.

He also said his party’s plan to “insulate millions of homes would ease the pressure on households, making bills cheaper and homes warmer”.

The news comes after weeks-long criticism of the government and the energy sector for failing to do more to tackle rising gas prices after the energy price cap rose by more than £100 earlier this month.

As of 1 October, the cap on what energy companies could charge households for their monthly consumption rose by £139 for people on default tariffs and £153 for people on pre-payment meters. As a result, millions face higher monthly bills.

Keith Anderson, the chief executive of Scottish Power, said on Thursday the market faced months of tumult that could shrink the market all the way back to just five or six companies unless the cap, set by Ofgem, was reviewed.

Without government and regulatory intervention, he told the Financial Times Britain is “in danger of just sleepwalking into an absolute massacre”.

The Liberal Democrats have called for a windfall tax on gas producers profiting from record-high prices to help support struggling households and businesses through the winter.

Party officials said wholesale gas prices had risen from 56p/therm during the first half of the year to 150p/therm, and are now reaching 300p/therm. Before that, natural gas prices had never reached 100p/therm, they added.

Serica Energy, a North Sea gas company responsible for 5 per cent of the UK supply, had already stated it expects “significant returns” due to the increase, the Lib Dems said.

Sir Ed Davey, leader of the party and a former energy secretary, condemned “fossil fuel companies [for] raking it in hand over fist through this gas crisis”.

“The least they can do is pay a little more in tax to help struggling families get through the winter,” he said, adding: “If Rishi Sunak is serious about tackling both the climate emergency and the cost-of-living crisis, he would introduce this one-off tax.”

The so-called windfall tax would look to raise funding to insulate people’s homes, slash energy bills and protect skilled jobs.

Asked about the new data from Labour, a government spokesperson said in a statement: “Protecting consumers is our top priority which is why our energy price cap will remain in place. We are also supporting vulnerable and low-income households further through initiatives such as the £500m Household Support Fund, Warm Home Discount, winter fuel payments and cold weather payments.

“Domestic fuels such as gas and electricity are already subject to the reduced rate of 5 per cent of VAT.”

Additional reporting by agencies

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