Soaring price cap set to leave energy bills as a proportion of benefits levels at ‘generational high’

• Citizens Advice calls on government to provide one-off grant this April to support families on the lowest incomes with their energy bills

• ‘This is the worst it’s ever been’: Frontline advisers already seeing a 40% increase in people seeking help on fuel debts

Further rises to the energy price cap will put energy bills as a proportion of benefit levels at a generational high and tip many more into hardship, according to Citizens Advice. 

The charity analysed energy tariff data against historic benefits levels going back two decades. It found that April’s estimated price cap rise will leave a single adult spending a third (33%) of their standard allowance - the basic rate of Universal Credit - on energy bills. 

This could rise to 37% of the standard allowance in October. The figures represent a historic high compared to 2002 levels which saw 14% of basic rate benefits spent on energy bills.

Up to 2.1 million single adults without children currently claim this basic rate of Universal Credit. The charity’s modelling excludes other benefit payments, including for housing costs. 

Citizens Advice says it is receiving increasing numbers of enquiries from people facing  ‘desperate choices’ because they are unable to keep pace with the soaring cost of living.

Citizens Advice is already seeing a surge in people seeking support:

• In the last three months of 2021 frontline staff at Citizens Advice helped one person every 40 seconds with a fuel debt issue - 40% more than compared to the same period in 2020

• Citizens Advice’s page on grants and benefits to help people pay their energy bills is the second most viewed page on its website right now, the most viewed it has ever been

• In December 2021 the charity’s consumer service supported double the number of people who’d run out of money to top up their prepayment meter, compared to the same time last year

The energy price cap, which sets default tariffs, is estimated to rise by £700 in April - over a 50% increase. Around 11 million households on default tariffs will see their bills increase straight away. 

Citizens Advice estimates an additional 600,000 customers currently on cheaper fixed rate tariffs will see their bills rise by a further £150 when their fixed rates end in the summer. The price cap will go up again by an estimated £200 in October.

The charity is urging the government to bring forward a package of support to help people with their bills, including a one-off Energy Support Grant to be paid through the benefits system this April and an expanded Warm Home Discount scheme.

Nicola Duffy, Energy and Consumer team leader at Citizens Advice Newcastle, said: 

“In over twenty years of advising, this is the worst it’s ever been. 

“We’re seeing people ration their fuel, or have their emergency prepayment meter run out when they’re at least a week away from their next benefit payment. 

“We supported one family whose electric was off and the food they did have in the fridge and freezer was starting to spoil.”

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“These figures confirm what we’re already seeing through our frontline services. Energy costs are eating into budgets and it’s families on the lowest incomes who’re feeling the biggest squeeze. 

“With further hikes set to push bills to a generational high, disaster is on the horizon if the government doesn’t act. 

“The single best way of helping low-income families weather April’s price cap rise is a one-off payment through the benefits system. 

“To help avoid us being in the same situation next winter when temperatures drop and bills soar again, the government must also expand the Warm Home Discount.”

Further detail on the modelling of benefits levels against energy bills

Citizens Advice’s figures are based on the annual rate of core income-based unemployment benefits, excluding housing and childcare benefits. 

Modelling uses the standard allowance of Universal Credit for a single adult over the age of 25. Energy costs are based on a single person living alone.  

Notes to editors

1. Data on benefit levels and energy bills based on analysis of Department for Business, Energy & Industrial Strategy (BEIS) average energy bill data, House of Commons historic benefit rates, and Centre for Sustainable Energy (CSE) consumer archetypes.

2. Benefits figures use the annual rate of core income-based unemployment benefits for a single person over 25, excluding additional elements such as housing and child. Prior to 2015 Citizens Advice used Income-based Jobseekers Allowance. From 2015 onwards Citizens Advice used the standard allowance of Universal Credit.

3. Latest available data from DWP (August 2021) shows there are 2.1million single adult households with no children receiving Universal Credit. Some of these households will receive the lower standard allowance for under-25s, meaning a higher proportion of their standard allowance would be spent on energy costs.

4. Average energy bills up to 2020 are based on BEIS data on average annual energy bills, and adjusted based on CSE archetype of a low-income, out-of-work single adult living in small 1-bed social rented flats in London. 2021 figure based on current price cap levels. April 2022 and October 2022 energy prices are based on price cap estimates from Investec (of £1,995 per year by April 2022) and Cornwall Insight (of £2,240 by October 2022), and adjusted based on the CSE archetype.

5. Citizens Advice supported more than 18,000 people with fuel debt advice in the last three months of 2021 (November - December)

6. In December 2021 the charity’s consumer service supported 599 people who had been disconnected from their supply because they could not afford to top up, compared to 272 the previous year

7. Between 1 January - 10 January, Citizens Advice helped 4,154 people with issues on food banks. In total during this period, 52,046 needed one-to-one advice from Citizens Advice

8. Citizens Advice includes the national charity; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.

9. Citizens Advice is the statutory consumer advocate for energy and post. We provide supplier performance information to consumers and policy analysis to decision makers.

10. The Citizens Advice Witness Service provides free, independent support for prosecution and defence witnesses in every criminal court in England and Wales.

11. Citizens Advice offers Pension Wise services at 500 locations in England and Wales.

12. Citizens Advice’s services are free, independent, confidential and impartial, and available to all regardless of race, gender, disability, sexual orientation, religion, age or nationality.

13. To get advice online or find your local Citizens Advice, visit citizensadvice.org.uk

14. For consumer advice, call the Citizens Advice consumer service on 0808 223 1133 or 0808 223 1144 to talk in Welsh.

15. We helped 2.6 million people face to face, by phone, email and webchat in 2017-18. For service statistics see our monthly publication Advice trends.

16. Citizens Advice staff are supported by over 23,000 trained volunteers, working at over 2,500 locations in England and Wales.