Millions of households will be spending nearly third of income on fuel by spring

Millions of households will be paying almost a third of their income in fuel costs this spring, amid warnings that a “black hole in provision” remains for Britain’s poorest families.

The vast majority of households in some vulnerable groups – including some 70% of pensioners – will be spending a tenth or more of their income on fuel from April, when support for energy costs will be reduced.

However, the number of households paying 30% or more of their income on fuel will double from April, from 1.6m now to 3.8m. The number of households paying a fifth of their income on fuel is projected to rise from 3m to 7.5m. Overall, two-thirds of British households will be spending 10% or more of their income on fuel within the next six months.

The figures have been produced by York University’s social policy unit for a pamphlet written by former prime minister Gordon Brown, who warned that the “scale of the increase is staggering”, and that a “black hole in provision” remained.

He called on prime minister Rishi Sunak and chancellor Jeremy Hunt to raise more funds from people with non-domicile tax status and banks to fund more support for those in need.

“People are worse off and 2023 is going to be worse than 2022,” Brown told the Observer. “People are going through these winter months, I’m afraid, knowing that things are going to get worse after April. You’ve got to provide a level of help with heating that is higher than it is at the moment.

“Why didn’t the government do anything about non-domiciles? Why didn’t they do anything about bankers’ bonuses? Why didn’t they do anything about the City generally? Clearly, there is a huge amount of inequality between the position of those privileged people and the people who are suffering.”

The government’s energy price guarantee (EPG) currently caps typical energy bills at £2,500 until April and it is being extended for another year. However, from then, the cap will rise to £3,000 based on average usage. The new figures suggest that the impact of energy costs is likely to be acutely felt.

Brown said 2023 was shaping up to be a year of far worse hardship across the UK than 2022. “Moving from October’s hardships to even more austerity in April will be very painful for the majority of families,” he writes in a forthcoming pamphlet called How To Survive This Winter. It is designed as a guide for grassroots organisations attempting to plug the holes in the welfare safety net.

The new figures suggest pensioners will be hit hard with more than 70% spending 10% of their income on fuel – seen by some as the benchmark for fuel poverty. However, an astonishing 96% of lone parent families with two or more children and over 85% of all couples with three or more children will be in the same situation by April.

It comes amid mounting evidence that the poorest are having to pay more for essential services than wealthier households. Nearly 7 million of Britain’s poorest people are paying extra for these basic goods and services. This “poverty premium”, including areas such as the price of credit, prepayment meters and shopping in smaller amounts, could be costing such families about £480 a year, according to a study by the Centre for Social Justice (CSJ) thinktank.

It found that a third of low-income households pay more for their electricity because they use prepayment meters or pay upon receipt of a bill, compared with 20% of all households. They are twice as likely as the average family to shop in pricier small supermarkets. About 29% of those paying at least one poverty premium say they are skipping meals to afford fuel.

The CSJ is proposing a series of reforms to tackle the problem, including guaranteeing access to free cash machines in poorer communities.

The former Tory leader Iain Duncan Smith said there was “something deeply unsettling about those with the least having to pay more than those with the most for life’s most basic essentials”.

The Treasury said: “This winter we are spending £55bn to help households and businesses with their energy bills – one of the largest support plans in Europe. To support the most vulnerable from April next year, we have announced a £900 cost of living payment for those on means-tested benefits, £300 for pensioner householders and £150 for people on disability benefits.

“This is on top of the energy price guarantee, which is forecast to provide an average of £500 support for households across the country from April, and an additional £1bn of funding for a further 12-month extension to the household support fund, assisting those who might otherwise fall through the cracks.”