The Progressive Economy Forum (PEF) said the poorest tenth of families could face bills of up to 47% of their disposable income this winter, even after taking into account support from Liz Truss’ energy price guarantee. The analysis comes as the chancellor, Kwasi Kwarteng, prepares to use his mini-budget on Friday to launch sweeping tax cuts aimed at middle and higher income earners on top of freezing energy prices in a support package worth more than 150 billion pounds. Average energy bills will be frozen by the government at £2,500 for a typical family from October for the next two years, in an intervention launched by Truss in her first week as prime minister to shield rich and poor from skyrocketing costs. However, the government has faced strong criticism for failing to provide targeted support to the poorest households, as the cost of living hits people on low incomes harder than wealthier people. According to the PEF, a middle-income household is projected to spend a third of its disposable income on energy bills, almost double the 17% it paid in 2020. But households in the top 10% will only pay a fifth of their disposable income of their income for energy costs. Highlighting the risks to the most vulnerable in society, it said the share of income spent by the poorest tenth of families on energy bills would more than double from 23% in 2020 to 47% this year. The estimates, produced using government data on household consumption, include the effects of the universal energy price guarantee and the £400 energy rebate for all households. As well as the bill freeze and energy discount, the government will pay £650 to 8 million households in means-tested benefits, with extra help for pensioners and the disabled. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Inflation has risen to its highest rate since the early 1980s as households are squeezed by the rising price of a weekly shop in addition to sky-high gas and electricity costs. Despite the government’s bill freeze, energy costs will still be more than double the level of a year ago. James Meadway, director of the Progressive Economy Forum, said: “These figures show the urgent need for additional support for household incomes over the next six months. With domestic energy bills set to rise by an average of 64% from their 2020 levels, despite government support, and food prices still soaring, households in Britain face an ominous few months ahead. “The government must urgently present plans to overhaul the energy tariff system, ensuring free basic energy needs for households and placing energy suppliers in public ownership as required.”
