Chancellor must do more to help poorest households, charity sayson March 21, 2022 at 7:12 am

One in five people think they will end up in debt this year and won’t be able to pay it back, a survey has found.

With energy bills and council tax set to rise from April, debt charity StepChange found 42% of people think they will struggle to pay these bills.

It is urging the Chancellor Rishi Sunak to use this week’s Spring Statement to do more to help poorer households.

Mr Sunak told the BBC he cannot “fully protect” people from the consequences of rising prices.

The debt charity wants the government to increase benefits by at least 7% in April to try to match the rate at which prices are rising in the economy, and give more funding to local councils to support people with vouchers, grants or discretionary payments to cover essential bills.

StepChange is also calling for an expansion of the Warm Home Discount and wants energy companies to stop trying to recover debt from people who cannot afford to pay their bills.

Modelling from the debt charity found that if energy bills hit £3,000 per year – which the industry has suggested could happen – the most financially vulnerable households will be spending £1 in every £6 they earn on energy costs.

The chancellor told BBC’s Sunday Morning programme: “I wish government could solve absolutely every problem and that I could fully protect people against all the challenges that lie ahead.

“I can’t do that, but what I would say is I will stand by them in the same way that I have done in the past couple of years.”

Millions of household will see sharp rises in energy bills from next month, when the government’s price cap is set to rise.

The higher cap means typical households face paying £1,971 a year from April, 54% more than they pay now, with a further rise expected in October.

The price of petrol and diesel has soared in recent weeks, worsened by a surge in oil costs due to Russia’s invasion of Ukraine.

Rising inflation, which the Bank of England has warned could hit about 7% this year, is also pushing up costs of food, clothing and transport.

The chancellor is due to give his Spring Statement on Wednesday and is already facing calls from more than 50 Tory MPs to cut fuel duty, which has been frozen for over a decade, to reduce the price of petrol and diesel.

StepChange chief executive Phil Andrew said the coming months will be “dire” for financially vulnerable people.

“Government must pull every lever at its disposal in order to protect those on the lowest incomes from the scars of debt and destitution.

“While the initial raft of support announced in February was welcome, the war in Ukraine has exacerbated an already difficult situation and more action is clearly needed,” he added.