Government announces £15 billion energy bill support package

The Government announced a £15 billion package of energy bill support in May 2022¹. At the time of the announcement, gas and electricity bills for a typical household were expected to rise to about £2,800 a year from October¹.

Since then, forecasts from Cornwall Insights have suggested the energy price cap could reach £3,582 a year for a typical household from October, and £4,266 a year from January 2023¹. The Resolution Foundation said this means a typical low-income household paying by Direct Debit is now expected to need an extra £418 to pay its energy bills over the first three months of 2023, compared with what was expected in May 2022¹.

The foundation's analysis, published on 15 August 2022, found that households in the lowest quintile of the income distribution would have to cut back almost 1 in £4 (24 per cent) of non-essential spending to cover heating, rent, food, transport and communication in January to March 2023¹. The richest tenth of households would have to cut back 1 in £12 (8 per cent) of non-essential spending¹.

The report also set out how housing efficiency affects bills. Families in energy-inefficient homes face monthly gas bills £231 higher than those in equivalent homes meeting the Government's efficiency target (EPC C), a penalty of £849 over the 2022-23 winter, or an average of £141 a month¹. The daily cost of turning on gas heating was put at £7.34 for families in EPC C homes, rising by 58 per cent to £11.60 a day for those in badly insulated homes¹.

Why it matters for households

The package was announced against a forecast of about £2,800 a year for a typical household from October 2022, but later forecasts put the cap at £3,582 from October and £4,266 from January 2023¹. For a typical low-income household on Direct Debit, the gap between the May expectation and the later forecast is £418 over January to March 2023¹.

The Resolution Foundation's figures show the burden falling unevenly. The lowest-income fifth of households would need to cut 24 per cent of non-essential spending, against 8 per cent for the richest tenth¹. Almost half (49 per cent) of the poorest fifth of households live in homes with uninsulated walls¹. The report notes that almost half of annual household gas costs come from usage between January and March, and that this matters particularly for those on pre-payment meters, whose costs are not smoothed over the year¹.

The report also cites 28,300 excess winter deaths in England and Wales in the last pre-Covid winter, with WHO estimates implying around 8,500 can be attributed to cold homes¹. By January 2023, the unit price of gas was set to be four times what it was in winter 2019¹.

What happens next

The Resolution Foundation said the Government would need to act quickly to put support in place for the winter, and that helping the lowest-income households should remain the core priority, with preventing middle-income families from falling behind also part of any new strategy¹. It also pointed to sourcing cheaper energy through low cost renewables and a drive to insulate UK homes¹. No further announcements on the package have been reported in these sources.