“Their families’ financial situations are already untenable,” she said. “The impact on those households is, in some cases, going to be fatal.”
Social security payments will rise by 3.1 per cent next month, tied to inflation levels recorded in September last year. But UK inflation is predicted to hit highs of seven or eight per cent, meaning benefit claimants will see a real-terms cut to their incomes which are already too low to cover the basics for many.
A number of groups including the Joseph Rowntree Foundation are calling on ministers to increase benefits by at least six per cent to make up some of the shortfall for people who are struggling, particularly those impacted by the £20-per-week universal credit cut made last October.
“You don’t have to be a mathematician to see there is going to be a huge gap,” said Morgan Vine, head of policy and influencing at Independent Age, which has warned the cost of living crisis could have a particularly significant impact on older people. “If you’re in your 80s or 90s the chance of your income changing is low. You aren’t going to get a new job, which I know is also the case for some disabled adults.
“They might be looking at these numbers and thinking, well I might be getting X amount back but that’s not going to plug the gap, and I’m cold, and I don’t have enough food.”
The energy price cap will rise by 54 per cent this April, adding an average £700 to annual fuel bills and hitting the finances of around 22 million households. The change could push millions more into fuel poverty, according to National Energy Action, meaning around 6.5 million people will be forced to forego using gas and electricity because they can’t afford it.
“Even before the pandemic, we estimated that about 80 people died per day because they were unable to heat their homes,” Peter Smith, director of policy and advocacy for the organisation, told MPs.
Chancellor Rishi Sunak recently announced a package of measures designed to ease the pressure of the energy crisis on households, namely a council tax rebate for those in bands A-D as well as a £200 “discount” on bills this October – which will function like a loan, to be paid back by all consumers at a rate of £40 per year for five years.
National Energy Action’s figures don’t take these interventions into account because the experts “don’t believe they can be relied on to reduce the cost for people who need it the most,” Smith warned.
The April council tax rebate raises questions of variation across local authorities and how those already exempt from council tax due to being on low incomes will benefit from the initiative.
And the £200 cut from bills in October could prove problematic “not just because it needs to be paid back, but [because] it’s going to be paid back in an exceptionally regressive manner,” Smith added. He highlighted how those on prepayment meters – usually those on lower incomes who may be in debt to their supplier – are seeing a bigger price cap rise to £2,017, and also pay a standing daily charge out of their credit.
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He said. “The way this rebate is going be paid back is through a higher standing charge. Those standing charges have been increasing year on year anyway regardless of the energy crisis.”
Clawing back the costs of the government’s intervention in this way could prove “disastrous” for prepayment customers in particular, Smith said, and could “significantly drive up instances of self disconnection, when households aren’t disconnected by their energy supplier but just stop buying credit because they cant afford it”.
Vine warned any interventions risk being ineffective among the older population if there isn’t a concerted effort to avoid stigma.
“I spoke to an older constituent who told me she wears a hat to bed, she often skips meals,” the Independent Age expert said. “When I said: ‘Why don’t you call us, we can give you information on pension credit’, she said: ‘There must be someone worse off than me, I wouldn’t want to take the money away from somebody else’.
“There is stigma around that and around claiming a benefit. Many of these people have worked hard all their lives.”
Recent Trussell Trust research showed the cost of living crisis is being exacerbated by the crippling debt repayments disadvantaged people are forced to make every month – to the government.
Around half of people reliant on food banks owe the government money – usually the Department for Work and Pensions – particularly to cover the advanced payment loan they were forced to take out to cover the five-week wait for universal credit.
“If you’re in debt to a private company, a private bailiff will do these long forms about your income and your expenditure to work out what you can give them,” Monroe told MPs. “If you say you can give them 20p a week, they go, okay then, it’s going to take you eight years to pay that off.
“The DWP doesn’t give anyone any say in how much they pay back.”