The End Fuel Poverty Coalition estimates that around 10.5 million households will be affected by fuel poverty in the first three months of next year (EFPC) released on Tuesday – meaning their income will fall below the poverty line after paying for the energy.
The UK government defines poverty as household income below 60% of the UK median, which was £31,000 ($37,500) in 2021 according to official statistics.
The predictions are based on new estimates from research firm Cornwall Insight, also released on Tuesday, which show the average household energy bill is expected to reach £3,582 ($4,335) a year by October and around £4,266 ($5,163) by January 355 ($430) per month.
The January forecast represents a 116% increase in energy bills from current levels. As fuel prices rise, estimates are struggling to keep up. Just last week, Cornwall Insight forecast that prices would rise 83% in January from current levels.
The research firm said it has revised its figures due to a rise in wholesale prices and a change in the way the UK regulator calculates its price cap. But there could be relief on the horizon: Cornwall Insight expects the bills to fall in the second half of 2023.
Fuel bills began to climb last year as a global shortage of natural gas supplies pushed wholesale prices to record highs. Russia’s invasion of Ukraine at the end of February only exacerbated the situation. The average United Kingdom Household bills are already up 54% this year, compounding a cost-of-living crisis that has forced many Britons to choose between “heating and eating”.
In May, the government announced a £15 billion ($18 billion) support package – including a £400 ($484) payment to 29 million households from October – to ease the burden of energy bills.
But Simon Francis, coordinator of the EFPC, said the latest price estimates mean the current level of government Support is a “drop in the ocean”.
Craig Lowrey, a senior adviser at Cornwall Insight, said in a Tuesday press release that if “£400 wasn’t enough to mitigate the impact of [the company’s] previous forecast, now it’s definitely not enough.”
Liz Truss, the UK Foreign Secretary and current front runner who will replace Boris Johnson as Prime Minister next month, has suggested cutting taxes to help people struggling with their bills rather than direct aid. Her rival, former finance minister Rishi Sunak, said more support was needed.
Meanwhile, the CBI – the country’s top business organization – has urged Johnson to bring the leading candidates together to agree on a way to help households and businesses with their energy bills, so action can be announced once the October price cap is set 26th of August. The new prime minister is not expected to be elected before September 5th.