Energy price cap rise prompts urgent calls to help disadvantaged young people and families

The charities made the call following today’s (Friday) announcement by energy regulator Ofgem that the energy price cap is to rise substantially in the autumn.

The rise will mean the average annual cost of a household energy bill will go up by 80 per cent in October to £3,554.

• Blog: Cost-of-living crisis is biting families and staff

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Youth homelessness charity Centrepoint points out that the new cost of an average energy bill is more than the amount of universal credit a young person aged under 25 receives (£3,183) in a year.

Centrepoint says its own research has shown a quarter of homeless young people have £20 or less of monthly income left after rent and bills and warn that the latest energy price rises, alongside other rising costs of living, will leave many struggling to pay for food and other essentials.

Rather than waiting until a new Prime Minister is appointed on 5 September, it is calling on the government to raise benefits for disadvantaged young people.

Billy Harding, policy and research manager at Centrepoint, said: “The price cap announcement will leave young people wondering how they will afford to live in the coming months.  

“Already, some of the young people we support have less than £5 a week after bills and essentials – and we know that previous government interventions have not reached them or have been swallowed by spiralling costs.  

“Young people are facing crisis after crisis and they can’t wait for a new Prime Minister to get the keys to Downing Street before action is taken. Bills, food and other essentials are unaffordable right now, which is why the government needs to urgently increase universal credit, like they did in the pandemic, to ensure the right support reaches those who need it most.”  

Katharine Sacks-Jones, chief executive of children in care charity Become, said on Twitter that the price cap rise will “push so many people over the edge into destitution”. 

We knew this was coming but it doesn’t make it any less devastating. This will push so many people over the edge into destitution. We urgently need action NOW - not acting is a shameful dereliction of duty. https://t.co/pahQnfWhBH

— Katharine Sacks-Jones (@KatharineSJ) August 26, 2022

She backed Centrepoint’s call for immediate action and said that failing to do so is a “dereliction of duty”.

The Child Poverty Action Group (CPAG) said the energy cap rise will “terrify” low-income families.

In a statement it said: “Their budgets have been stretched for months and soaring prices will make it practically impossible to escape the tightening grip of poverty.”

Our response to this morning's energy cap announcement. pic.twitter.com/wlgavg0WE0

— Child Poverty Action Group (@CPAGUK) August 26, 2022

CPAG added that low-income families will face a £1,000 shortfall between the cost of energy bills and state support and has called on the government to act.  

A government spokesperson said: “We know people are incredibly worried about rising energy bills, following unprecedented gas prices across the continent driven by global events, including Putin’s aggression in Ukraine and his weaponisation of energy in Europe.
 
“Direct support will continue to reach people’s pockets in the weeks and months ahead, targeted at those who need it most like low-incomes households, pensioners and those with disabilities. As part of our £37bn package of help for households, one in four of all UK households will see £1,200 extra support, provided in instalments across the year, and everyone will receive a £400 discount on their energy bills over winter.
 
“The civil service is also making the appropriate preparations in order to ensure that any additional support or commitments on cost of living can be delivered as quickly as possible when the new Prime Minister is in place.” 

Meanwhile, analysis by youth homelessness charity Centrepoint finds that unemployed young people living alone and claiming Universal Credit could spend up to 77 per cent of their standard allowance a month on energy bills when costs rise.  

This means a young person could be left with just £15 a week to spend on other bills and essentials such as phone, internet, food and trave compared with £32 left for claimants aged over 25.  

This has more than doubled from October last year when the price cap was £1,277 and energy bills took up 28 per cent of their standard allowance, Centrepoint says. 

The analysis also finds that the average young person who is in work, earning £1,608 per month and living in a one-bed property could expect to spend up to 13 per cent of their income on energy bills – more than double what they could expect to spend on the same bills last year.