According to a research group, wealthy households will receive twice as much support intended to lower living expenses as less fortunate households in 2019.
According to the Resolution Foundation, richer houses will receive subsidies worth £4,700 in 2023, compared to £2,200 for the poorest, assuming the government reduces National Insurance and curbs energy bill increases.
Up until 2024, the average annual home energy bill will be capped at £2,000.
The research group criticized middle-income the initiative for lacking “details and costings.”
The Resolution Foundation, which focuses on low to middle-income households, stated that help for the wealthiest tenth of households will “far surpass the level of support for the poorest tenth of households despite the latter being most susceptible to high energy prices.”
Prime Minister Liz Truss has refused to put a price tag on the massive support program, stating that “exceptional circumstances call for extraordinary measures.” The program criticized might cost up to £150 billion. Up until 2024, the average annual home energy bill will be capped at £2,000.
The research group criticized the initiative for lacking “details and costings.”
The Resolution Foundation, which focuses on low to middle-income households, stated that help for the wealthiest tenth of households will “far surpass the level of support for the poorest tenth of households despite the latter being most susceptible to high energy prices.”
Prime Minister Liz Truss has refused to put a price tag on the massive support program, stating that “exceptional circumstances call for extraordinary measures.” The program for lower-income might cost up to £150 billion.
When approached by the BBC, the Department for Business declined to comment because of the state of national mourning.
The amount suppliers can charge for each unit of energy is restricted by the government’s Energy Price Guarantee.
An average household will spend £2,500 over the next two years on energy costs if they consume 12,000 kWh (kilowatt hours) of gas and 2,900 kWh (kilowatt hours) of electricity annually.
That annual bill would have been £3,549 a year without our action. A year ago, it cost £1,277.
Homes in England, Scotland, and Wales will be able to get help with their energy bills, while homes in Northern Ireland will also get a similar amount of cash.
Torsten Bell, CEO of the Resolution Foundation and a former Labour adviser, praised the government’s assistance as “colossal” and “bold,” but warned that families should “still expect a difficult winter ahead.” Nevertheless, Bell insisted that keeping costs down was “absolutely the right thing to do in terms of providing support where it is needed.”
The “near-universalist action,” according to the Resolution Foundation, was in line with prior assistance provided in the shape of a £150 council tax rebate and a £400 energy bill discount.
The think tank continued by saying that lower-income households had also received targeted assistance through the benefits system, but claimed that because tax cuts benefited the wealthiest half of households, “the overall package of government support now in place to support incomes in 2022–23 provides no more support to poorer than richer households.”
The government will pay a hefty price for the Energy Price Guarantee. This study says it might be larger than the banking bailout during the financial crisis, even if they won’t say how much it may total. Consider that for a moment.
Many organizations claim that this enormous amount of money is traveling in the wrong direction, even though it is welcomed as some movement after a summer of inaction.
Even while most households experienced the same significant price increase in October, not every household is affected in the same way. Because they tend to have smaller homes to heat and spend a greater proportion of their income on energy, people who are less well off won’t benefit as much from this guarantee and will still find it difficult to keep up with their bills at the current rate.
This month, there will be a “fiscal event,” as the government refers to it, and the need for more specific and targeted assistance for the poorest households is growing. Although this was Liz Truss’s first announcement as premier, its scope and effects make it likely to be remembered as the one that changed the economy.
The support program is “extremely poorly targeted,” according to Paul Johnson, director of the Institute for Fiscal Studies (IFS).
“The Treasury and the government appear to have stumped for a mechanism to achieve that,” he added. “Finding a way to deliver [assistance] to the many, many millions who need it, without providing it to the many, many millions who don’t.”
Government borrowing will be used to pay for the state involvement, increasing the UK’s already substantial debt load. The overall cost of the support will be determined by the fluctuating energy prices in the global energy markets.
Is that the wisest use of the funds, Mr. Johnson questioned?
“I do believe it’s vitally important that the government thinks through and gets to a better or more targeted method of assisting us as we move through to next winter,” the speaker said. “I rather fear that is an inevitable way in the short run if everybody who needs help is to get that help.”
Ms. Truss rebuffed calls from the Labour party, the Liberal Democrats, and the SNP to extend a windfall tax on gas and oil firm profits to pay for the package.
A one-time tax imposed by the government on a business is known as a windfall tax. Targeting businesses that have benefited from a windfall, or something they were not responsible for, is the aim.
By excluding “any attempt” to pay for the government’s increased assistance through further windfall taxes, Mr. Bell claimed that “the welcome assistance today could have a terrible sting in the form of higher mortgage payments and higher taxes tomorrow.”
To increase domestic energy supplies, other measures include easing the fracking restriction and issuing additional licenses for North Sea oil and gas.
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