Further price cap rise to around £2,500 expected in October 2022

The Resolution Foundation said on 1 April 2022 that the energy price cap could rise again in October 2022 to around £2,500, based on commodity market prices at the time¹. The think tank said that would mean 32 per cent of households, or 7.5 million families in England, would be in fuel stress, even after accounting for the measures the Chancellor announced in February¹. Fuel stress is defined in the report as spending more than 10 per cent of after housing cost incomes on energy bills¹.

The projection followed the 1 April 2022 increase in the energy price cap, which the report described as a 54 per cent overnight increase in energy bills, pushing a typical annual dual fuel bill up by £693 to £1,971 a year¹. That April rise alone was expected to push more than 5 million English households into fuel stress¹. A further increase to £2,500 would see another 2.5 million households fall into fuel stress¹.

The report said the impact would fall unevenly. Four in five of England's poorest families were set to face fuel stress by October, compared with just one in fifty of those in the top income decile¹. Households in the North of England and the Midlands were more at risk than those in London and the South¹. On energy efficiency, the gap between a typical EPC E and EPC C-rated home was £320 a year and was set to jump to £380 a year in October, affecting 4.2 million families in England alone¹. More than half of households in EPC E rated homes and four in five of those in EPC F rated homes would fall into fuel stress, compared with one in five for those in better-insulated properties¹.

The report also set out shortcomings in the support delivered through the council tax system. It said 640,000 of the poorest families, in the lowest three income deciles, would miss out because they live in properties in Bands E to H, while around half of those in the top income decile would receive the rebate¹. It added that the OBR assumed 20 per cent of households would not make a claim, saving the Government £0.2 billion, and that one in five of the poorest households in London live in Band E to H properties and would receive no automatic support¹.

The report said the heating bill of a typical over 60s couple could reach £1,315 this winter, more than double their bills during 2021 and £180 higher than an equivalent working-age household¹.

Why it matters for households

The figures describe the scale of the pressure on household budgets from October 2022, when energy use rises with colder weather. The report's estimate of around £2,500 for the cap is a projection from commodity prices as at 1 April 2022, not a confirmed cap level, and the report notes that the April cap itself was already a 54 per cent increase¹. The households identified as most exposed are those on the lowest incomes, larger families, older households, those in the North and Midlands, and those in poorly insulated homes¹. The report also identifies gaps in the council tax rebate route: households in Bands E to H in the lowest three income deciles, those exempt from council tax such as student households, tenants whose landlord pays the council tax, and those who do not pay by direct debit and must claim¹. The Energy Price Guarantee did not exist at the time of this report; it was announced later in 2022. Energy prices in Northern Ireland operate under a separate market and are not covered by the cap figures cited here¹.

What happens next

The report says another increase in the price cap is expected for October 2022, and that continued pressure on households through energy bills means it is only a matter of time until more support is announced¹. It points to the imminent British Energy Security Strategy, expected within weeks or days of publication, and to uprating benefits in 2022-23 as options under discussion¹. No confirmed October cap level had been announced at the time of the report¹.