Rising Prices Six Ways Government Could Help Soften Impact Of Crisis

There are a number of measures that the government could take to alleviate the impact of soaring energy prices.

- Phillip Inman

Any rescue package would need to be swift and extensive to prevent households being plunged into poverty this winter as home energy prices escalate. Ministers will also need to dig deep to prevent more businesses hit by rising energy costs from defaulting on loans and declaring themselves bankrupt.

An increase in benefits

The government’s energy bills support scheme provides a £400 discount on bills in October for every household, a £650 means-tested one-off-payment to eight million low-income households, £150 for those on disability benefits and £300 for pensioners. This was designed when the forecast for the October price cap was £2,800.

Most economic thinktanks have urged the government to focus on boosting the finances of low-income families to meet the higher costs of energy from an increase in the cap in October and January, possibly to as high as £4,200 a year.

The International Monetary Fund has criticised European countries, including the UK, for offering some subsidies to all income groups rather than targeting cash at those who are most vulnerable to fuel poverty.