Households on low incomes will be spending on average 18 per cent of their income after housing costs on energy bills after April.
The analysis compares the household spend on gas and electricity bills of several different family types on low and middle incomes between 2019-20 and after the increase in April this year, when the energy price cap is expected to rise by over 40 per cent. (See chart).
The findings also highlight large numbers of children living on low incomes for prolonged periods of time in the years running up to the pandemic. Around 1 in 5 children have lived on a low income for at least three of the four years between 2016 and 2019.
For children in lone parent families this rises to around one in three children. For many young children, this persistence of poverty means going without essentials is all they have ever known or can remember.
While there is little difference in the overall increase in bills from April, with all households facing an immediate increase of between around 40 per cent and 47 per cent, the difference in the proportion of household incomes these increases will represent is stark, JRF said.
Middle-income households will be spending on average 6 per cent of their incomes on energy bills, and no more than 8 per cent for any family type considered.
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Source: Joseph Rowntree Foundation
The figures are released alongside JRF’s flagship state-of-the-nation report which reveals a worrying increase in the number of children growing up in very deep poverty.
The report paints ‘a stark’ picture of the state of the nation ahead of the coronavirus pandemic, with rising child and pensioner poverty, and very high poverty rates for larger families and single-parent families, as well as Bangladeshi, Pakistani and Black families.
JRF says that the economic impacts during the pandemic were ‘very uneven’, with people on the lowest incomes most likely to find their earnings reduced if they were working and to get into debt.
The charity is warning that without extra support, people already in poverty are likely to find a sharp increase in energy bills very difficult to cope with.
People living in deep and persistent poverty were already under constant pressure trying to afford food, bills and other essentials. With the impact of rising energy bills expected to be much harsher for families on low incomes, the JRF is arguing for targeted protections to prevent serious hardship once the energy price cap is lifted.
Following a cut to Universal Credit in the autumn, the level of support for people who are unable to work or looking for work ‘remains profoundly inadequate’. JRF is calling for an immediate emergency payment for people on the lowest incomes to help prevent hardship in the months ahead.
Around 1.8 million children are growing up in ‘very deep poverty’, meaning the household’s income is so low that it is completely inadequate to cover the basics. This represents an increase of half a million children between 2011-12 and 2019-20.
Very deep poverty is defined as household income equivalent to or less than 40 per cent of the average income for their family type in the UK. On average across all family types, a household in very deep poverty would have an income of £9,900 or less per year after housing costs, taxes and National Insurance contributions are deducted.
Katie Schmuecker, deputy director of policy and partnerships at JRF said, ‘No childhood should be defined by a daily struggle to afford the basics. But the reality is that many children growing up today won’t have known anything else. The fact that more children are in poverty and sinking deeper into poverty should shame us all.
‘Rising energy prices will affect us all, but our analysis shows they have the potential to devastate the budgets of families on the lowest incomes. The Government cannot stand by and allow the rising cost of living to knock people off their feet. The alarm is sounding loud and clear and the case for targeted support to help people on the lowest incomes could not be clearer.
‘But this must go hand in hand with urgent action to strengthen our social security system, which was woefully inadequate even before living costs began to rise. Our basic rate of benefits is at its lowest real rate for 30 years and this is causing avoidable hardship. The Government must do the right thing and strengthen this vital public service.’
Kevin Courtney, joint general secretary of the National Education Union, said the report’s findings were ‘deeply concerning’.
'It is shaming to our country that around 1.8 million children in the UK are growing up in very deep poverty, meaning their household’s income is so low that it is completely inadequate to cover the basics.
'The effects of poverty in childhood can last a lifetime and impact on education in multiple ways. We know that from NEU’s own member research the impact that poverty has in the classroom. Indeed, an NEU survey of 10,000+ school and college staff in April 2021 found that almost all respondents (94 per cent) believe poverty affects learning, with 51per cent saying it does so to a 'large extent'.
'There is no doubt that school staff have stepped up for their students during the pandemic, as they always do in a crisis. But their actions alone cannot compensate for this deep poverty and the Government needs to take urgent action to tackle this scourge.'
A Government spokesperson said, 'We recognise the pressures people are facing on their household bills, which is why we have taken decisive steps to support them. The energy price cap has been protecting around 15m households from high global gas prices. We are also supporting vulnerable and low-income households with the cost of fuel bills through schemes such as the warm home discount and our £500m household support fund.
'Working families on universal credit are already seeing more money in their pockets, with an average of £1,000 more a year, and we’re increasing the living wage again in April. We will continue to look closely at the pressures facing people and what further measures might be needed on abating high energy costs.'
