Inflation, energy bills & furlough scheme to create a 'very bleak winter' - get ready now

Millions of families could be £107 worse off every month, according to new research from Royal London. From October 6, the £20 weekly uplift to Universal Credit will be withdrawn, impacting millions of claimants. According to Government figures, 5.9 million people are claiming Universal Credit, rising from three million before the coronavirus pandemic emerged in March 2020.

Additional economic changes may also pose a challenge for struggling families. The furlough scheme will also be ending in mere days, and many experts fear workers will not have jobs to return to.

In recent weeks, an energy crisis has emerged as providers warned gas prices may rise from October 1 for 15 million households. Royal London calculated those on a default dual fuel tariff who pay by direct debit will see an average annual increase of £139 from £1,138 to £1,277. Prepayment customers will see an even larger annual increase of £153 from £1,156 to £1,309 – a rise of nearly £13 a month.

The latest inflation figures also add to these difficulties. In 2020, the average household spent £277 a month on food expenses but with the latest three percent Consumer Prices Index (CPI) rise, this could increase to £285 a month this year.

Sarah Pennells, Consumer Finance Specialist at Royal London, commented: “The COVID-19 pandemic is perhaps the biggest life shock our society has experienced.

© GETTY Winter energy bills

“As we continue to feel its effects, there’s never been a more urgent need to help those who are financially vulnerable.”

Royal London has a partnership with national charity Turn2us, to help more people prevent a life shock from becoming a crisis. Recent research found 15.9 million UK adults are more financially vulnerable as a result of the pandemic.

Ms Pennells continued: “From October, many families are going to be hit by significant changes to their monthly outgoings and many will have less money to pay their bills due to the cut in Universal Credit. But there are organisations that can offer support, such as our charity partner Turn2us, who can help people work out what benefits or grants they may be eligible for.

“For those suffering from a financial shock or worried about making ends meet, there are steps you can take. For example, if you’re finding it hard to pay your energy bills, contact your provider as they should help you with ways to pay and don’t be afraid to ask for help from a debt advice charity if you’re struggling.”

Thomas Lawson, Chief Executive at Turn2us, also issued a warning for the months ahead.

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“The coming months will undoubtedly be very hard for individuals and families across the UK,” he said.

“The £20 per week cut to Universal Credit was already going to leave many families struggling to keep up with the cost of living. This, now combined with a sudden surge in energy prices, could spell disaster and plunge thousands more people into financial insecurity or even poverty; especially those of us whose financial resilience has been worn away by the pandemic.

“Our own research tells us that over half (52 percent) of people on Universal Credit will struggle to pay their bills when the cut comes into effect, with a further one in four people (25 percent) unable to afford their rent or mortgagepayments. This means a very bleak winter for the most financially insecure among us and urgent action is certainly needed from the Government to safeguard people against financial crisis. We also urge everyone to check what support they are eligible for and contact their utility suppliers if they know they are going to struggle to pay upcoming bills.”

Fortunately, Royal London and Turn2Us shared a number of tips to help families budget for the months ahead.

© EXPRESS Universal Credit

Budgeting tips

Consumers should start by reviewing their outgoings and cut any unnecessary costs.

Write a monthly budget

“If your income has reduced, you will have to consider your spending and one of the best ways to do this is by working out a monthly budget. Start by working out how much money you will need to cover your monthly essentials such as your rent or mortgage, utility bills, Council Tax and any other debts, such as credit cards and/or personal loans.

“Once you’ve done this, you should have a clearer picture of how much money you have to spend on areas such as your weekly shop.”

Check your benefits entitlement

“It can be complicated to work out what state benefits you are entitled to. Turn2Us have a Benefits Calculator to check your entitlement to means-tested benefits. The results page will tell you which means-tested benefits and tax credits you may be entitled to and how much you may receive.”

Shop around and switch your household bills

“You can save money by shopping around and looking for better deals for energy, broadband, and car and home insurance. Normally, you would be able to save money on energy bills by switching from the standard variable tariff to a better deal.

“However, volatile energy pricing means that this may be the cheapest option at the moment. It’s worth double checking with your provider that you are on the best tariff available to you. Broadband tends to be more expensive for those who are ‘out of contract’, 20 million customers according to Ofcom are ‘out of contract’ and therefore likely to be overpaying.”

Check your eligibility for help with Council Tax

“If you don’t think you will be able to afford to pay your Council Tax because you’re now on a lower income or claiming benefits, you might be eligible for a council tax reduction. What you get will depend on where you live, your circumstances, your household income and whether you have children or other dependents living with you.”

Review your subscriptions

“If you are having to get by on a reduced income, your focus should be on covering essential costs such as your mortgage or rent, utility and food bills and cutting back on non-essential spending.

“It’s worth having a quick look through your bank transactions and credit card statements over the last few months to remind you of any regular payments that come out. You may be surprised at some of the things you are still paying for, but don’t need or use any more.”

What state support is there for the winter months?

Fortunately, there is still a range of support available to struggling families as the weather gets colder. Those who were born on or before September 26, 1955 could get between £100 and £300 to help them pay their heating bills through Winter Fuel Payments.

To be eligible for Winter Fuel Payments, a claimant must be born on or before September 26, 1955 and lived in the UK for at least one day during the week of 20 to 26 September 2021.

Cold Weather Payments can also be awarded to eligible claimants where the average temperature in their area is recorded as, or forecast to be, zero degrees celsius or below over seven consecutive days.

Claimants will get £25 for each seven day period of very cold weather between November 1 and March 31. To be eligible for this support, claimants must be in receipt of certain other benefits such as Pension Credit or Universal Credit.

Additionally, those on low incomes and/or Pension Credit could receive money off their winter electricity bills under the Warm Home Discount Scheme. Eligible claimants can get £140 off their winter energy bills between October and March.

To see if one would be eligible for any of these benefits, claimants can utilise a range of free-to-use benefit calculators which break down what support they could get. Turn2us, Policy in Practice and entitledto all offer free tools which can break down availability for struggling families.

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