The Chancellor announced a package of measures on 1 February 2022 that he said would be worth GBP350 to households facing higher energy bills1. Ofgem confirmed the same day that the average cost of heating a home will rise from GBP1,277 a year to GBP1,971, a 54% increase1. Much of the Government support will be repaid through what the End Fuel Poverty Coalition describes as a "heat now, pay later" scheme1.
Even after the announced support is counted, the End Fuel Poverty Coalition calculates the latest price cap rise will still be 27%, which it says is the biggest rise since records began1. The Coalition estimates the rise will plunge an additional 1.1m homes into fuel poverty, taking the total to 22% of all households in England, about 12.5m people1. It adds that the final total may be higher and closer to 26% of all households because of the repayable nature of the support1.
The Coalition states that since the price cap was introduced in 2017, energy bills have risen 52%, with rises of almost GBP600 (GBP578) passed onto consumers in the last year alone1.
"Today's catastrophic price cap rise will force hundreds of thousands more households into fuel poverty from April."
The Coalition said the Government's proposals "will do little but offset or defer part of the most recent rise", and that only a full package of support would be sufficient in the short term1. Juliet Phillips, Senior Policy Advisor at E3G, said the UK's exposure to volatile gas markets is fuelling a cost-of-living crisis, and that without a long-term plan to reduce demand for fossil gas, emergency measures can only act as a sticking plaster1.
| Measure | Figure |
|---|---|
| Average annual cost of heating a home, before | GBP1,2771 |
| Average annual cost of heating a home, after | GBP1,9711 |
| Price cap increase | 54%1 |
| Residual rise after Government support | 27%1 |
| Government support claimed | GBP3501 |
| Additional homes in fuel poverty | 1.1m1 |
Why it matters for households
The gap between the support announced and the rise in the cap is the central point for household budgets. On the Coalition's figures, a household receiving the full GBP350 still faces a residual increase of 27%, and part of that support is a loan recovered later rather than a reduction in cost1. For a home's energy independence, the announcement does nothing to reduce the volume of gas a property needs to stay warm; it addresses the price of that gas, not the demand for it1. The Coalition's estimate that fuel poverty could reach 26% of households in England reflects the deferral effect: costs moved into the future still have to be paid1.
Households on low incomes, and the advisers working with them, may find the distinction between a grant and a repayable scheme relevant when assessing what support is actually available. The site's grants and schemes hub sets out how government support routes are structured, and ECO4 covers the energy company obligation scheme that funds insulation and heating measures. Guidance on combining support streams is at Can ECO4 measures be funded with other government grants?, and Energy Grant Scams and Fake Government Schemes explains how to check whether an approach about a grant is genuine.
What happens next
The price cap rise takes effect in April 20221. The Coalition states that hundreds of thousands more households will enter fuel poverty from April1. No further dated steps are given in the source.