Analysis by the Resolution Foundation found that energy bills are set to rise higher than they did after Russia invaded Ukraine in 2022 – and disposable income set to drop by over £1,000 a year
Hard-up Brits face higher energy bills than they did after Russia invaded Ukraine, experts warn – with John Healey admitting the government can never completely remove cost-of-living pressures.
The Chancellor unveiled a raft of measures to give “breathing space” to struggling families, with extra taxes on banks and gambling helping to fund them. But overnight analysis by left-leaning think-tank the Resolution Foundation said the “scattergun” Budget was poorly targeted and warned the 2020s will be “an almost completely lost decade for living standards”.
Economists believe typical annual energy bills will reach £1,750 despite government support by next year. That compares with £1,685 after prices soared due to Vladimir Putin’s illegal war. Donald Trump’s harebrained onslaught on Iran is piling more misery on families – with average disposable income expected to fall by over £1,000.
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The Resolution Foundation also found the gap in support between the poorest and wealthiest households is expected to be just £14. Mr Healey told BBC Radio 4’s Today Programme: “I do want to be honest with people, government can never remove completely the cost of living pressures that people feel.
“We can help where we can, and that’s what I’m doing with creating a bit of breathing space for these households with this new household energy payment. I’m asking the banks to help fund that, and that’s a political choice.”
On Wednesday he announced a series of interventions to help with the cost of living, including £100 payments to 20 million households to help with rising energy costs. He also said controversial standing charges on gas bills would be scrapped – and pledged to look at doing the same for electricity.
There were also tax breaks for high street companies, with 70,000 – including cafes, shops and pubs – set to be removed from paying business rates. Vape shops and online retailers will be asked to pay more – a move Mr Healey said was fairer.
Ruth Curtice, chief executive of the Resolution Foundation, said: “Faced with a tough backdrop amid global economic turmoil, the Chancellor delivered a scattergun Budget that did little to address the sharp challenges facing Britain.
“Cost of living support is being spread far too thinly and will leave even those families receiving help facing higher energy bills than they did during the last energy price shock.”
The think-tank’s economists predicted typical disposable income would drop by £1,050 between now and 2029. Ms Curtice continued: “A more dramatic change of tactics may be needed, and we did not learn how the Government will choose between public service ambitions and household incomes. Next year the choices will unavoidably get starker.”
Its analysis found the poorest half of households will gain £158 on average from cost of living support this year and next – just £14 more than the £144 received by the richest half. This highlights a “complete failure to target help at those who need it most”, the Foundation said.
Mr Healey told the BBC he had limited wriggle room because of the tough global situation driving up the cost of government debt. He said: “Global economic storms, the Iran war, trade tensions, Russia’s invasion of Ukraine now nearly into its final part of the fifth year, these are economic storms and economic shocks. They’re hitting countries worldwide but they are hitting us here at home and people are feeling it, they’re seeing it in the prices at the pumps, they’re seeing it on their energy bills, they’re seeing it in the cost of new mortgages.
“And whilst it’s hitting household loans, it’s hitting business loans, it’s also hitting government costs as well. And what I confirmed yesterday was the Office of Budget Responsibility said the conflicts are largely driving this, and the cost of servicing the government debt has gone up by £14billion this year because of those factors.”
He continued: “What I’m trying to do is ensure that where we are relieving the cost of business or relieving the cost of living with a budget that does offer a bit of breathing space, I’m doing that in the fairest possible way.”
Andy Burnham has defended the measures, telling broadcasters that the Budget was bold. He said: “”It’s pretty bold to help 20 million households with energy costs through the council tax cut this winter.
“It’s bold to lift 70,000 businesses out of business rates altogether, and that will give a real lift to high streets up and down the country.”
And he said there are “strong signs that the economy will improve over the coming years”.
