The ‘triple whammy’ of incoming budget pressures over the next six months could worsen low-income families by more than £ 1,000 a year, according to a think tank.
The Resolution Foundation said inflation, rising energy bills, the imminent threat of the health and social services tax and the universal credit cut proposed next month could make households worse off even after increases in the minimum wage have been taken into account.
With inflation and soaring energy prices being a global phenomenon resulting from the emergence of the coronavirus pandemic – and therefore beyond government control – the foundation urges ministers to take action where they need it. can by keeping the increased unified communications in place for 4.4 million homes.
Britain is set to enter a tight cut in the cost of living over the next six months as high inflation and rising energy bills collide with the government’s decision to cut costs. benefits and raise taxes
Karl Handscomb, senior economist at the Resolution Foundation, said that maintaining the weekly bonus “would go a long way to alleviating the next cost-of-living cut.”
The Treasury provided an additional £ 20 a week for benefit recipients at the start of the pandemic, but Chancellor Rishi Sunak has so far insisted it must end by October.
The increase was supposed to last for a year, but was extended for six months in the March budget.
In their financial analysis, independent researchers at the think tank said they took into account the Consumer Price Index (CPI) reaching 4% – the highest in a decade – over the winter, the increase energy bills with the 12% increase in the energy price cap from October 1 and a further planned increase of 19% in six months, the reduction in the CPU from October 6 and the health contribution and social security of 1.25% being due from next April.
The increase in the energy price cap means bills are expected to rise from £ 139 per year to £ 1,277 for a typical gas and electricity customer from next month.
The foundation said that even with a 37p increase in the national living wage starting next April and the largest increase in benefits since 2012 in the same month due to inflation expected to reach 2.7%, a typical low-income household was always likely. feel the pinch, with families with children the worst off.
A couple with two children, where the parents both work full time and earn the minimum wage and slightly above that rate, would be £ 23 a week worse over the next six months, with the boost from £ 3 a week of the national living wage overshadowed by rising energy bills and cutting UA, according to the organization.
Their analysis also suggests that a single parent working part-time could see their income drop by £ 20 per week over the next six months, while a low income without children working full-time for minimum wage could see their minimum wage. from £ 9. weekly increase in the hourly rate of pay wiped out by the cost of living crisis.
Mr Handscomb said: ‘Britain is set to enter a tight contraction in the cost of living over the next six months as high inflation and rising energy bills collide with the government decision to cut benefits and raise taxes.
“Low and middle income families will face the greatest pressure.
“Many of the high inflation factors are expected to be short-lived, but that will do little to reassure struggling families in the weeks and months to come.
“While policies such as the National Living Wage will offer a welcome increase in income for some, for many low-income families, it will not come close to offsetting the damage caused by the reduction in universal credit.
“Maintaining the £ 20 per week increase will go a long way in easing the next cut in the cost of living for millions of families.”
A government spokesperson said: “We have taken steps to keep the cost of living for families down, including caps on energy prices, which is in place to protect 15 million homes. against the increase in world gas prices this winter and the doubling of free childcare.
“Our warm home rebate, winter fuel payments and cold weather payments will also support millions of vulnerable and low-income households with their energy bills.
“The increase in universal credit has always been a temporary measure to help applicants get through the most difficult stages of the pandemic, and it has done so.
“It is right that as the economy rebounds we should focus on our multibillion pound plan for jobs, helping people get back to work and helping employees advance in their careers and to earn more. “