Not every poor person is on benefits, so where’s their lump sum for energy bills? | Torsten Bell

Those earning as little as a £1 too much will miss out on Jeremy Hunt’s £900 to ease the pain after the price cap is lifted

The autumn statement wasn’t exactly full of joy, with its forecast of a rise in unemployment of 500,000, but it did include information on energy bill support after April – Jeremy Hunt announced a less generous version of Liz Truss’s price guarantee, capping typical bills at £3,000 v £2,500 now.

Lower-income households can’t afford that, so Hunt also announced a £900 lump sum for households on benefits such as universal credit. Can we rely on such payments? They’ve only been used in July and November 2022 (Hunt is repeating a Rishi Sunak innovation), which means we have little evidence. So a University of Bath briefing on the experience, drawing on claimant interviews, adds value.

The good news: it worked. Automatically giving it to those on benefits meant payments reached bank accounts without delays. Unsurprisingly, the cash was used for getting through the month, with a quarter saving it for energy bills.

The payments made a difference, but relying on them has major downsides: it creates a cliff edge between those on universal credit and someone earning £1 too much to qualify, who gets nothing. Remember four out of 10 of the poorest households aren’t on benefits.

This cliff edge also creates real disincentives for people to work more. The research included a claimant who unwittingly lost out on energy support because they had worked longer hours the previous month.

Introducing policy in a crisis is never easy and we need to recognise politicians have limited options. But they need to be transparent about the rough justice involved. A single person earning £20,000, and not on benefits, faces an average bill rise of £1,900 next year compared with 2021-22 – an 11% cut in disposable income. A difficult year lies ahead.

Torsten Bell is chief executive of the Resolution Foundation. Read more at resolutionfoundation.org

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Torsten Bell

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