More than 800,000 low-income households struggling with fuel bills will not receive the £100 Household Energy Payment promised in the Budget, according to new research.
Chancellor John Healey last week announced a one-off £100 payment for people living in council tax bands A to D in England, with Wales matching the payment and the Scottish government planning to replicate it. Official figures show around 20 million households in those bands will be paid the sum directly into their bank account in January to support them with rising energy costs.
The £2.6bn move is funded by increasing the tax on bank profits from 3% to 6%, running from January next year to April 2028, and higher taxes on high-stakes gambling machines.
Who is missing out
Because the scheme is administered through the council tax system and is not means tested, analysis from Policy In Practice finds that 838,000 households currently claiming Council Tax support will not benefit from the extra support, despite struggling with rising energy bills in a larger home.
Policy In Practice said official estimates show 12 per cent of households in the bottom 30 per cent of incomes would not be eligible for support, while 17 per cent of fuel-stressed households, which spend at least 10 per cent of family budgets on energy bills, would also miss out.
The social policy think tank found a low-income family of five or more is 1.6 times more likely to live in a property in band E-H compared to an average low-income household. This means over 130,000 larger, low-income households will miss out on the £100 this winter.
Impact on vulnerable households
The think tank also found 84 per cent of households that will not qualify for the £100 handout live with a disabled person, have children or are below the poverty line. Lower-income households are also less likely to pay their bills through direct debit, meaning they will not be paid the money automatically.
Deven Ghelani, director of Policy in Practice, said: "Over 800,000 low-income families are going to be missing out on this vital relief from high energy bills. Millions of people are [also] missing out on over £24bn of [wider] support that is going unclaimed each year because of low awareness, administrative complexity and stigma."
Ghelani added that many low-income households were overdrawn, meaning the support designed to help with heating costs would go toward existing debt.
Criticism of council tax bands
Campaigners criticised the use of council tax bands, which use 1991 property values, and have been lobbying for a scheme based on income or access to certain benefits.
Policy In Practice said: "Council tax bands are an imperfect proxy for household needs. Low-income households can live in larger, higher-band properties, and often have little choice over the size or band of property they're allocated. And increasingly, several families or generations share a home to manage costs."
EDF, the energy provider, predicts households will face a rise of £469 on January 1, taking average bills to £2,192 a year. E.On Next forecasts a rise of £460.
Healey said the scheme was designed "to take the pressure off in the coldest months and see people through to the spring". He also announced he would ask Ofgem to remove the fixed daily standing charge from gas in 2027, or as soon as possible afterwards.
A government spokesman said: "Tackling the affordability crisis is our priority, which is why we're giving families immediate breathing space. From January, millions of households will receive £100 towards their energy costs from January, alongside action to make bills fairer, including removing standing charges from gas bills and supporting those in energy debt."
