Government intervention will limit energy bills rise today to 7 per cent – but families in poorly insulated homes still face huge increases this winter

The Government’s Energy Price Guarantee and £400 Energy Bill Support Scheme discount means that the average household will see annual bills increase by just 7 per cent – from £1,971 in April to £2,100 – when the energy price cap rises today. But even with hugely welcome intervention on this scale, millions of families across the country remain exposed to unaffordable energy costs, the Resolution Foundation warns.

Within overall changes in energy bills, the price of each unit of gas consumed has increased more than three-fold in two years. This is a bigger increase than electricity, which has doubled in cost since late 2020, and bad news for the five-in-six British homes heated by gas, as this – alongside other factors such as property type – will drive disparities in exposure to high energy costs.

• Bill increases for those in poorly insulated homes will be twice as big as those in energy efficient properties. On average, families living in inefficient homes (rated F on the EPC scale) will see their dual fuel energy bills increase by £1,350 compared to last winter, even accounting for the Energy Price Guarantee and £400 Energy Bill Support discount. This increase is more than double the £670 increase that families living in an EPC C rated property will face, whose annual bills will be less than £1,950.
• Families in rural properties and those in small settlements will also see big increases, as these homes are less well insulated and typically larger than the national average. Average energy bills in villages, hamlets and isolated dwellings will rise to £3,247 this winter, compared to £2,420 for urban areas – with remote households seeing an annual increase of more than £1,300.
• Owner occupiers will, on average, face larger bill increases than private or social renters. The average owner occupier will face annual energy costs of £2,650 from today, higher than the £2,400 and £1,980 expected for private and social renters. Families in all tenures will be facing additional cost of living stresses, with mortgages and rents all increasing at the same time as energy costs.
• There is relatively little variation across English regions. London households will see the greatest rise at £1,017 – while families in the North East will see the smallest at £890, a difference of just 14 per cent.

Jonathan Marshall, Senior Economist at the Resolution Foundation, said:

“The Government’s energy bill support packages mean that families will see their energy bills increase by just 7 per cent this winter – a significant intervention which will protect households from the worst of energy price rises.

“But while the scale of support is hugely welcome, millions of households will remain exposed to unaffordable energy costs. People living in poorly-insulated homes will see bill increases this winter that are more than double that for families in well-insulated homes.

“And while the Government has made the right call on short-term intervention on prices, in the longer term incentives to reduce consumption will become increasingly important.”