The chairman of Bishop’s Stortford Food Bank fears the charity is “on the edge of a very tall cliff” as the town’s most hard-pressed families face rocketing fuel bills.
Electricity and gas bills for around 18m households on standard tariffs will go up by £693 a year in April, a 54% increase from £1,277 to £1,971.
And there are fears the Russian invasion of Ukraine could escalate the cost of living crisis from October, further hitting both fuel and food bills.
The rises are worse for energy pre-payment customers, who are often the poorest. They will see an average annual increase of £708 – from £1,309 to £2,017.
In April people in council tax bands A to D in England – around 80% of homes – will receive a one-off £150 discount from the Government to help with fuel bills.
In October customers in England, Scotland and Wales will receive a £200 rebate on their energy bills to be repaid at £40 a year for five years, starting in April 2023.
Bill Macdonald, the chairman of the Bishop’s Stortford Food Bank, said: “Helping people in fuel poverty is becoming a more important part of our work at the food bank – and is likely to be more so when the gas and electricity price rises hit home.”
The referral system is the same as for food parcels. Recipients are given a fuel voucher from an approved outside agency, such as Citizens Advice. The food bank, based at the Methodist Church in South Street, is then able to top up clients’ pre-payment cards.
Bill explained: “The amounts vary depending whether it’s winter or summer, but at the moment we give £20 towards electricity and the same amount towards gas. We have looked at how we could help those who pay by direct debit but haven’t been able to work out a suitable mechanism to do this so far.
“In most cases, however, people in need have tended to have pre-payment cards – which are incidentally a very expensive way of buying gas and electricity.”
There is currently a three voucher limit for people coming to the food bank for help with utility costs.
Bill said: “We don’t have the resources to provide long term financial support to people, and even if we did, I think we would be reluctant to help people indefinitely as, just like food vouchers, we would be concerned about creating long-term dependency.
“Like many food banks, we sometimes worry that we may just be dealing with the symptoms of poverty rather than the underlying causes. Simply giving someone a box of food or a small amount on their meters is really not enough!
“For this reason, we are currently talking to Citizens Advice about how we could work in partnership with them to provide individual debt and other advice/support for clients.”
The food bank’s bank balance is currently healthy, bolstered by a generous anonymous donation from a local business and contributions from the community.
Bill said: “For the time being our funding is still pretty healthy and we are managing to balance incomings and outgoings OK, even though we are helping more than twice as many people as we did before the pandemic. But, and it’s a big but, this may all change pretty shortly. In fact, in some ways, it feels like being on the edge of a very tall cliff! Once the cost of living rises, particularly energy bills, and the decision not to raise benefits, including Universal Credit, start to have an impact on people who are just about managing – we worry that demand may spike still further and whether we would be able to cope.”
According to the House of Commons Library, the cost of living has been increasing across the UK since early 2021 and in January 2022, inflation reached its highest recorded level since 1992.
Consumer prices, as measured by the Consumer Prices Index (CPI), were 5.5% higher in January 2022 than a year before.
Prior to the conflict in Ukraine, inflation was expected to peak in April 2022 – when the new default price cap on household energy bills comes into effect.
In early February, the Bank of England was forecasting the CPI inflation rate to peak at 7¼% in April 2022 before easing. However, on March 2, the National Institute for Economic and Social Research think tank released new forecasts that included an expectation that UK inflation would peak at 8.1% in the third quarter of this year. Some economists have suggested 10% is possible.
At the same time, household budgets are being squeezed by changes in taxes and benefits including an increase in National Insurance contributions from April. Wages are also forecast to rise more slowly than inflation.
Low-income households spend a larger proportion than average on energy and food so will be more affected by price increases and benefit increases from April are based on the figure for inflation in September 2021 (3.1%), so there will be a fall in their value in real terms.
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