THE CHILD Poverty Action Group and dozens of other charities have called for a 7% hike in benefits in a demand made to coincide with Tory Chancellor Rishi Sunak’s Spring Statement today.
They wrote: ‘Prices are rising at the fastest rate in 30 years, and energy bills alone are going to rise by 54% in April.
‘We are all feeling the pinch but the soaring costs of essentials will hurt low-income families, whose budgets are already at breaking point, the most.
‘There has long been a profound mismatch between what those with a low income have, and what they need to get by.
‘Policies such as the benefit cap, the benefit freeze and deductions have left many struggling.
‘And although benefits will increase by 3.1% in April, inflation is projected to be 7.25% by then.
‘This means a real-terms income cut just six months after the £20 per week cut to Universal Credit.
‘Child Poverty Action Group’s analysis shows families’ Universal Credit will fall in value by £570 per year, on average.
‘The Joseph Rowntree Foundation has calculated that 400,000 people could be pulled into poverty by this real-terms cut to benefits.
‘The government must respond to the scale of the challenge.
‘Prices are rising across the board.
‘Families with children in poverty will face £35 per month in extra energy costs through spring and summer, even after the government’s council tax rebate scheme is factored in.
‘These families also face £26 per month in additional food costs.
‘The pressure isn’t going to ease: energy costs will rise again in October.
‘A second cut to benefits in six months is unthinkable.
‘The government should increase benefits by at least 7% in April to match inflation, and ensure support for housing costs increases in line with rents.
‘All those struggling, including families affected by the benefit cap, must feel the impact.
‘Much more is needed for levels of support to reflect what people need to get by, but we urge the government to use the spring statement on 23 March to stop this large gap widening even further.
‘The people we support and represent are struggling, and budgets can’t stretch anymore.’
Signed by:
Alison Garnham, Chief Executive, Child Poverty Action Group; Emma Revie, Chief Executive, The Trussell Trust; Graeme Cooke, Director of Evidence and Policy, Joseph Rowntree Foundation; Morgan Wild, Head of Policy, Citizens Advice plus over 50 other charities and anti-poverty organisations.
- New research by Citizens Advice shows predicted £145-a-month hikes to energy costs in October could mean one in four adults – equivalent to 14.5 million people – will be unable to afford their bill.
This is up from around five million saying they already can’t afford April’s price increase of £60-a-month.
The charity included the government’s support measures in its calculations.
Two in five (41%) of those warning they’ll be pushed into the red next month have already borrowed money to pay for essentials.
The stark findings came ahead of today’s Spring Statement where the Chancellor has been urged to announce further support for families struggling to pay their bills.
Citizens Advice issued a ‘red alert’ warning last month as demand for its services soared.
Its frontline staff are continuing to help record numbers access crisis support like food banks and one-off charitable grants amid the cost-of-living crisis.
In the last week alone, Citizens Advice advisers have supported:
• A woman who couldn’t afford to top up her prepayment meter after a hospital visit, meaning she was left with nothing but spoiled food in the fridge;
- A parent who had to turn off their appliances and wash their children’s clothes at their mother’s house to save on energy costs;
- A woman in her 70s with a chronic health condition who wears multiple layers and her duvet to keep warm as she can’t afford to put her heating on.
Clare Moriarty, Chief Executive of Citizens Advice, said: ‘These staggering findings must be a wake-up call to the government. With one in four unable to afford their bills come October, measures announced so far simply don’t meet the scale of the challenge.
‘Parents shouldn’t have to decide between giving their kids a hot bath or saving the money to buy them new school shoes.
‘The Chancellor has a crucial opportunity to bring forward more support for those most in need in his Spring Statement.
Increasing benefits in line with inflation, expanding the Warm Home Discount and announcing a more generous energy rebate should be top of his list.’
Three key findings from Citizens Advice’s latest research:
1. Many don’t think the £200 energy rebate
will help
In February, the Chancellor announced a £200 energy rebate which is anticipated to be paid into customers’ accounts in October and paid back over the following five years.
Citizens Advice found more than eight in 10 (83%) said that they did not think that the government’s loan would make a significant difference to their ability to pay their energy bills.
2. Prepayment customers will feel the biggest pinch
People using prepayment meters – many of whom are already on low incomes – are set to be hardest hit by rising energy prices. They’re less able to spread the cost of their energy throughout the year and are at greater risk of being disconnected if they can’t afford to top up.
Rising energy costs could see an average family on a prepayment meter facing bills of £336-a-month – over £10 a day – in December 2022, when the same usage would have cost them £147 in December 2021.
3. Demand for crisis
support continues to grow
February has continued to break unwelcome records when it comes to people seeking support from Citizens Advice.
Referrals for crisis support like food bank vouchers and charitable grants in February surpassed January’s previous peak, with more than 24,000 people referred for support.
Additionally, advisers supported more than 1,000 people on prepayment meters who simply couldn’t afford to top up and were at risk of losing heat and power.
One in 12 people turned to Buy Now Pay Later (BNPL) to cover basic costs – such as food and toiletries – in the last six months, Citizens Advice has found.
But some are relying on it more than others. The charity discovered young people, those in debt and those claiming Universal Credit, are at least twice as likely to have used BNPL for essentials than the general population.
Buy Now Pay Later is often advertised at checkouts as an easy way of splitting or delaying payments on items such as clothing or electronics.
But it remains unregulated, and Citizens Advice is particularly worried about the rise of firms offering BNPL for food shopping in the past few years.
The charity’s frontline advisers have been raising red flags on the problems they’re seeing, including a parent using BNPL to buy baby clothes while waiting for a benefit payment and someone in debt using BNPL for the weekly food shop.
‘It was either use BNPL or starve, so I used it’
Audrey, a pensioner who works for a few hours a week to top up her income, used BNPL for a £40 food shop as she didn’t have enough money for food that month.
Despite struggling to repay, the provider has bombarded her with offers to borrow hundreds of pounds more. She has never used it again.
Audrey said: ‘It was either use BNPL or starve, so I used it. I sort of knew I would struggle to make the repayments but I did not have any other way of getting food. I bought canned food as they are non-perishable and would last me longer.
‘I have been struggling to repay the money. They constantly harass me, calling me for payments. It’s really stressful as if I could afford to pay it back straight away, I would.
‘This company also sends me texts and emails offering £100 credit and even £500. It makes no sense as I can’t even manage to repay £40, how would I repay £100 or even £500?’
Gillian Percival, a benefits caseworker at Citizens Advice Copeland in Cumbria, said: ‘Buy Now Pay Later is a double-edged sword. It can be useful if you understand what you’re getting into, but if you’re using it out of desperation you probably have no way to repay.’
