A new analysis reveals that Labour's proposed £100 energy payment will fail to benefit more than 830,000 low-income households. The measure, announced by Chancellor John Healey as part of a £2.6 billion plan to assist Britons with soaring energy costs, is intended to support up to 20 million households in council tax bands A to D.
Healey stated that the initiative, partly funded by a levy on banks, would provide relief during the coldest months and help households until spring. However, campaigners have voiced concerns that the payment is inadequately targeted and insufficient to counteract the projected energy price increases in January. Ofgem's price cap saw a 3.6 percent increase to £1,723 for typical households on October 1, with an additional 22 percent rise anticipated in the new year.
The £100 handout is also expected to disproportionately benefit the North and Midlands over the South East, where fewer homes fall into council tax bands A to D.
The government's own estimates suggest the payment will reach only 88 percent of households in the bottom three income deciles and 83 percent of 'fuel-stressed' households. A report by the Policy In Practice think tank, utilizing administrative data and its Low Income Family Tracker (LIFT) platform, found that 838,000 households currently receiving Council Tax support will not qualify for the additional aid.
"Council tax bands are an imperfect proxy for household needs," Policy in Practice stated. "Low-income households can live in larger, higher-band properties, and often have little choice over the size or band of property they're allocated. And increasingly, several families or generations share a home to manage costs."
The analysis further indicated that low-income families with five or more members are 1.6 times more likely to reside in properties in council tax bands E-H compared to the average low-income household. This suggests that over 130,000 larger, low-income households could miss out on the payment this winter.
Deven Ghelani, director of Policy in Practice, commented, "Over 800,000 low-income families are going to be missing out on this vital relief from high energy bills." He also noted that millions of people are missing out on over £24 billion in unclaimed support annually due to low awareness, complexity, and stigma, calling the situation "shocking at the best of times, but unforgivable in a cost of living crisis."
According to Policy in Practice, 84 percent of households that will not receive the £100 handout live with a disabled person, have children, or are below the poverty line. The think tank also pointed out that lower-income households are less likely to pay bills via direct debit, meaning they won't receive the payment automatically. Many of these households are also overdrawn, potentially using the energy payment to cover existing debts rather than current energy costs.
In addition to the £100 payment, Healey's budget included the removal of standing charges on gas bills. However, critics like Ruth Curtice, chief executive of the Resolution Foundation, have described the measures as "terribly badly targeted" given the dire economic outlook.
A government spokesperson affirmed that addressing the affordability crisis is a priority, stating, "Tackling the affordability crisis is our priority, which is why we're giving families immediate breathing space. From January, millions of households will receive £100 towards their energy costs, alongside action to make bills fairer, including removing standing charges from gas bills and supporting those in energy debt."