This week Citizen’s Advice contacted Jon Cruddas MP regarding the cost of living crisis, how it is being exacerbated by rising energy prices, and the implications of this for people living across Dagenham and Rainham. It is estimated that energy bills could go up by £700 per household when the price cap increases in April. This has the potential to push thousands of local people into fuel poverty overnight.
Labour has been calling on the government to cut the rate on VAT for household energy bills as soon as possible for a 12-month period in conjunction with a targeted expansion of the Warm Homes Discount which would support the most vulnerable.
Citizen’s Advice are proposing a four-part package of reform which would include:
- Provide targeted support to low-income households in April 2022 via an ‘Energy Support Grant’ through the benefit system. Winter Fuel Payments of £100-300 are already paid to pensioners each year - an equivalent one-off payment could be paid to all Universal Credit and legacy benefits claimants, with an additional payment to low-income retired households in receipt of Pension Credit. This would put money in the pockets of those that need it most.
- Benefits should be uprated by the Bank of England forecast inflation rate of 6% for April, rather than the planned September rate of 3.1%. This is a cost neutral solution which would help ensure benefit levels reflect the current cost of living.
- Temporarily extend the Warm Homes Discount to channel money directly to those that need it most. Increasing the level of the rebate, expanding the number of eligible households and increasing provision for energy companies to provide extra financial assistance will support people in Winter 2022 when prices are set to soar further.
- Spread the cost of supplier failures over 2-3 years. Current plans expect customers to pay off the majority of the Supplier of Last Resort Levy from April 2022, adding an additional £94 to bills over and above planned bill increase.
Jon Cruddas MP said: “There is a global gas price crisis, but a decade of Tory failures on energy policy has left working families uniquely exposed and as inflation spirals out of control so does the cost of living crisis. The Conservatives paint themselves as the Party of economic stability but on their watch those on the lowest incomes are being hit hardest, whilst fat cat oil and gas companies are expected to report near record incomes for 2021/22.
“Citizen’s Advice do amazing work across the country to support ordinary people, and I fully back their proposals. In addition to their four-part plan Labour are proposing a windfall tax on energy companies to help fund a national package of support that would save households around £200. As it stands, working people are paying the price for Conservative mismanagement.”