UK Families in the Energy Crisis: Impact and Implications of the UK Price Cap Policy

Description

Inflation has risen to the highest rate since the early 1980s. As a result, UK families are dealing with a mixture of a rapidly rising cost-of-living and sky-rocketing prices of gas and energy. This condition is putting households’ budgets under intense pressure. Households must decide the best way to allocate their limited financial resources, e.g. having to choose how much of their disposable income is going to be allocated to the weekly shop and consequently how much is going to be left for heating. All of this is despite the government freeze on energy bills.

The energy model investigates the impact of the UK Energy Price Cap guarantee on Britain’s disposable income. It predicts that Britain’s poorest households risk spending almost half of their disposable income (47%) on gas and electricity this winter, even after the support from Liz Truss’ energy price guarantee is taken into account. The energy costs will still be more than double the level a year ago.

Publications and outputs

Report:

• Protecting households from energy price surges, Progressive Economy Forum, James Meadway and Gissell Huaccha, August 2023

Journal articles:

• Regional persistence of the energy efficiency gap: Evidence from England and Wales, Gissell Huaccha, Energy Economics https://doi.org/10.1016/j.eneco.2023.107042
• Who bears the energy cost? Local income deprivation and the household energy efficiency gap, Kausik Chaudhuri and Gissell Huaccha, Energy Economics https://doi.org/10.1016/j.eneco.2023.107062 

Media:

• “The most vulnerable shoulder rising energy costs because their homes aren’t efficient enough – here’s why that’s so hard to tackle”, The Conversation, November 2023
• “Poorest risk spending half disposable incomes on energy bills, UK report says”, The Guardian, September 2022