No one should be cut off this winter because they can't afford bills, UK chancellor says

Household disposable incomes are expected to drop by 10 per cent through 2023

The UK chancellor has said no one should be cut off this winter because they cannot afford to pay their energy bills. Photo: PA
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No one should have their energy supplies cut off this winter because they cannot afford to pay their bills, the UK chancellor has said.

Nadhim Zahawi said the government was working with energy companies to ensure vulnerable people get the help and understanding they need.

His comments come amid a worsening cost-of-living crisis, which will see household disposable incomes drop by 10 per cent over the course of this year and next.

“No one should be cut off because they can’t afford their bills,” he told Sky’s Kay Burley during a visit to Washington.

“I am working with the companies, and NGOs of course, to make sure people who really are struggling get that help, both financially, the £37 billion ($43bn).

“But the companies themselves have already started to write letters and emails to ask people if they are vulnerable, if they feeling they can’t pay, they should contact their supplier, their companies.

“My pledge to your viewers is that we will deliver the £37 billion, so that £1,200 goes to the most vulnerable 8 million households [on means-tested benefits].”

Think tank the Resolution Foundation said the number of people living in absolute poverty is set to rise by three million, to 14 million in 2023-24, unless policies or economic forecasts change.

It warned wages are now falling at their fastest rate since 1997, representing a 10 per cent fall in mean disposable income by 2023-24 which “is likely to be the worst for at least a century”.

The figure is equivalent to £3,000 for the typical household, according to the foundation.

“Britain is already experiencing the biggest fall in real pay since 1977, and a tough winter looms as energy bills hit £500 a month,” said Lalitha Try, a researcher at the Resolution Foundation.

“With high inflation likely to stay with us for much of next year, the outlook for living standards is frankly terrifying.

“Typical households are on course to see their real incomes fall by £3,000 over the next two years — the biggest squeeze in at least a century — while three million extra people could fall into absolute poverty.”

Experts have warned of the impact that could have on children whose parents cannot afford to pay for their energy bills, saying cold homes will damage their lungs and brain development.

“There will be excess deaths among some children where families are forced into not being able to heat their homes,” Dr Simon Langton-Hewer, president of the British Paediatric Respiratory Society, told The Guardian.

“It will be dangerous, I’m afraid.”

The boss of Ovo Energy, the UK’s third largest energy supplier, has put forward a plan that would subsidise bills for the poorest households by allowing energy companies to borrow from a government-backed fund.

Under Stephen Fitzpatrick’s plan, everyone would receive some help, but higher earners would see theirs taper off as they used more energy. That is similar to how the tax system works, with a standard allowance and higher rates for bigger earners.

And all households will see £400 knocked off bills in six-monthly instalments starting from October.

But Mr Fitzpatrick said those payments should be made in full before Christmas.

He also said both the higher charges paid by prepayment customers and the standing charge, which customers pay regardless of their use, should be scrapped.

Mr Fitzpatrick said helping low-income families with energy bills “has to be the first order of business” for the new Conservative leader and prime minister.

“If we don't use every available moment over the next 12 weeks to solve this, we are going to see a winter like never before with people going hungry and going cold and the NHS being overwhelmed by the health impacts of the energy crisis,” he told the BBC.

Updated: September 01, 2022, 10:03 AM