Large families may be forced to spend more than a quarter of their disposable income on energy bills next year, according to a new analysis. The average bill for electricity and gas is expected to reach £742 for large households in January, a significant increase from £246 at the start of this year.
The analysis suggests that a person in a large household with an average post-tax income of £2,615 per month could lose 28 per cent of it to energy providers. For those in average-sized homes, this figure drops to 20 per cent. Households with average disposable income of £31,383 will spend about 12 per cent on energy in 2023, while those in four-bedroom detached properties could see energy costs consume 17 per cent of post-tax earnings, rising to 37 per cent for low-income households.
The projections come amid soaring wholesale gas prices, exacerbated by Russia halving supplies to Europe through the Nord Stream 1 pipeline. The UK is also grappling with a cost-of-living crisis, with inflation expected to reach 11 per cent by autumn. The energy price cap rose by an average of £700 in April, but the full impact is yet to be felt as many households reduced usage during warmer months.
The Government has announced a support package, with households receiving £66 off energy bills in October and November, and £67 between December and March. However, critics argue this does not go far enough. Tory leadership contenders Rishi Sunak and Liz Truss have proposed additional measures, including cutting VAT on energy bills and scrapping green energy taxes.
Richard Neudegg of Uswitch.com warned: 'It is absolutely clear that urgent measures are needed to get everyone through this winter. Consumers are heading into an extremely difficult winter, and the latest predictions for the upcoming energy price cap bring only more bad news.'
