United Kingdom

Energy crisis: UK Government urged not to cut benefit amid soaring gas prices

BORIS Johnson and his cabinet are facing more pressure to backtrack on their planned cut to universal credit amid warnings that energy prices are going through the roof.

According to research by the Resolution Foundation, around 4.4million households will see their fuel bills rise in the same month as the planned £20 per week cut to Universal Credit comes in to force.

The UK Government introduced an uplift to the benefit during the pandemic, but has insisted it was always meant to be temporary and is adamant it will be reduced at the end of this month.

However campaigners are urging ministers to think again amid the growing energy crisis.

The energy price cap is set to rise by £139 a year (12 per cent) to £1,277 for a typical gas and electricity customer a year from October 1.

But a larger increase of £153 (13%) a year will affect pre-payment meter customers, the Foundation said, with families on universal credit more likely to be reliant on such meters.

UK consumers face rising fuel bills after the wholesale costs of gas and electricity rose in recent months.

The price of gas has risen by 250% since January, in part due to less wind, a colder winter last year and high demand from Asia.

Electricity supply and prices have been hit too, after a key cable between the UK and France went on fire last week.

Energy suppliers are going bust, with several appealing directly to the Chancellor and Boris Johnson for help.

They argue that the energy price cap means it is impossible for them to operate, as they are being forced to sell fuel at a price lower than what they are currently paying for it due to the wholesale price hikes.

Business Secretary Kwasi Kwarteng is to update MPs on the situation this afternoon, after considering a bail-out for some firms.

Jonny Marshall, senior economist at the Resolution Foundation, said: “Low income families are facing a cost of living crunch on several fronts this autumn with energy bills rising alongside wider price increases, while Universal Credit is also due to be cut by £20 a week.

“Around 15 million households are set to face higher prices next week when the energy price cap is raised.

“This will be particularly acute for low income families on Universal Credit, who are four times as likely as the rest of the population to be on pre-payment meters, and therefore face even bigger increases to their bills.

“The Government must ensure that the cost and volatility of rising energy bills doesn’t fall entirely on households, for example by making support schemes like the Warm Homes Discount more widely available to households, and maintaining the £20 a week uplift to Universal Credit.”

The SNP said the Conservatives have created a “cost of living crisis” and called for Rishi Sunak to support energy firms.

Stephen Flynn, the party’s Business, Energy and Industrial Strategy called for an emergency package of measures to help those struggling.

It includes reversing the Universal Credit cut, extending the uplift to legacy benefits, introducing a real Living Wage, and introducing an energy payment for lower income families this year.

He said: “The UK is facing a Tory-made cost of living crisis – as a toxic concoction of Tory cuts, tax hikes and the long-term damage of Brexit are hammering low and middle income families.

“The urgent need to boost household incomes, and reverse rising levels of poverty in the UK, will be the central issue in the upcoming budget. It is essential that an emergency package of measures is introduced to boost incomes and reverse the damage caused by Tory policies.”

Labour MP Ian Murray, the party’s shadow Scottish Secretary, called on both the Scottish and UK Governments to work together to protect Scots consumers.

He said: “It is a fundamental failure of long-term government planning from both governments over the last decade that the country is so exposed and vulnerable to this energy crisis and it is families and businesses that are paying the price.

“The Scottish and UK governments must come together to deliver solutions – they could start by investing in new island interconnecters and reviewing transmission charges to boost Scotland’s energy generation.”

He also hit out at the First Minister after her party abandoned a pledge to create a public energy company, saying: “In 2017 Nicola Sturgeon promised a public energy company which would help protect families from rising bills, yet 4 years on it’s just another broken SNP promise.

“The people of Scotland deserve better than a tired SNP government more interested in press releases than protecting households from rising bills, and a Tory government that has wasted the last decade and has now left the country facing the worst energy crisis in a generation.”



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