UK energy bills are set to rise at least 14 times faster than wages this year, according to new data.
According to new analysis from the Trades Union Congress (TUC), gas and electricity bills are set to rise by 54% when Ofgem’s price cap rises in April, while the average weekly wage is set to rise by just 3, 75% in 2022. .
The TUC estimated that record energy prices could wipe out the total value of pay rises this year.
Average wages are expected to rise by around £1,000 ($1,309) a year in nominal terms, but April’s energy price cap hike of £693 will wipe out 70% of those gains.
A further rise expected in October could also wipe out any gains. In October, the energy price cap is expected to have risen by more than £1,500 for the year.
Even before the announcement of the new energy price cap, wage growth was failing to keep up with that of utility bills. Data estimates that since 2010, energy bills have increased twice as fast as average wages.
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The TUC said low-income UK households will be hardest hit by soaring bills, and that years of weak wage growth and cuts in benefits have left working families “badly exposed” to the cost of living pressure.
Low-paid workers on Universal Credit (UC) will see their benefits increased by just 3.1%, or £121, over the year from April 2022, leaving many of them with a large financial deficit .
“Even increasing benefits in line with the expected inflation figure of 8.1 per cent would give families just £6.07 a week, or an extra £316 a year – a figure outstripped by rising health care costs. energy,” the TUC said.
British workers are currently suffering the longest wage squeeze in over 200 years, with real wages still worth less than they were in 2008. After more than a decade of wage stagnation, real wages are set to fall by £50 a month this year.
The trade body called on the government to come up with new measures to support struggling families.
He said previous “energy loans” announced by the Chancellor in February were “woefully insufficient”.
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The TUC has called on ministers to cut household spending by:
Introduce a one-off energy company tax and use the funds to provide energy grants that at least match future increases in the energy price cap for vulnerable households, replacing the inadequate £200 loans offered by the government;
Deployment of a rapid home insulation program, targeted at low-income households and implemented by the public sector;
Giving UC a meaningful boost – the fastest way to get extra funding for families. The TUC believes the UC should be raised to 80% of the actual living wage, or around £270 a week. Even increasing the standard payment by current or expected inflation would do little to compensate for the recent reduction of £20 per week.
The five-week wait, two-child limit, and cap on benefits within UC should also be removed.
“Anyone who works for a living should earn enough to get by. But years of stagnant wages and social security cuts have left millions severely exposed to sky-high bills,” said TUC General Secretary Frances O’Grady.
“With households across Britain pushed to the brink, the government must do much more to help workers with crippling energy costs.
“That means imposing a windfall tax on oil and gas profits and using the money raised to give struggling families energy grants – not loans.
“It means a real increase in Universal Credit to prevent low-income workers from being pushed into poverty. It’s the fastest way to help families in need. And that means developing a long-term plan to raise wages across the economy.