03In most places, the Government support package isn’t enough to offset inflation
The Government recently announced a package of £15 billion to support households with increasing energy costs. Amongst other measures, it includes a £400 flat payment for all households, an extra £650 for those on benefits and £300 to support pensioners. This is not the only package announced by the Government but it is the most comprehensive (as it supports all households), it specifically targets energy bills, and is designed to help poorest households more.
The relief the package gives varies across the country. Previous Centre for Cities research has shown that it broadly matches the North-South divide set out above: cities in the North and Midlands are likely to receive a higher amount of support than cities in the South because a higher proportion of their residents are either benefit recipients or pensioners.11
How much support the package offers differs across cities. As Figure 9 shows, there are only eleven cities where the average support offsets the average increase in energy costs. These are Middlesbrough, Hull, Newcastle, Slough, Newport, Swindon, Sunderland, Telford, Crawley, Milton Keynes, and Peterborough.
In the remaining 47 cities, the Government’s package will not cover the average increase in energy costs. This is because its criteria are not based on actual energy needs and do not consider the fact that energy demand is influenced by the energy efficiency of the housing stock. Estimates suggest that the average household in Burnley or Bradford is expected to pay an additional £85-£115 a year, compared to £23 in London or £4 in Plymouth.
Unless more support is provided, and targeted towards those whose actual energy costs are expected to increase the most, many of these places in the North are also likely to see energy bills jump even higher when the October price cap is lifted next October.
Figure 9: The cost of living package in most cities is estimated to be below the increasing energy costs
These figures are for the average resident of a city. They do not mean that all residents in London and Plymouth will be protected from the rising energy costs. Those who live in energy-inefficient housing in these places are still likely to face net increase in energy costs, even after receiving Government packages.