Middle-earners face being left stranded
MIDDLE England may have to ration energy use – with warnings of a financial crisis as bad as the 2009 credit crunch.
Average gas and electricity bills of around £5,000 are likely to send the budgets of middle income – white collar workers like teachers, managers, young solicitors and other professionals – “over the edge”, financial experts warn.
Millions of cash-strapped middle-class households could be on their own from April after Chancellor Jeremy Hunt said he would scrap the Energy Price Guarantee which capped prices at an average of £2,500. Instead the Treasury will consider more targeted aid – expected to be aimed at the poorest and most vulnerable groups.
Average weekly earnings for workers in August this year were £617 a week – or £32,000 a year, according to the Office for National Statistics.
Money expert Martin Lewis called for more support for middle-earners. He said: “Ministers are going to need to stretch the help net. It won’t work for them politically and it won’t work for people’s pockets if they are only helping those on benefits.There is very little anybody can do personally right now apart from cutting their own usage.”
The Resolution Foundation warned there will be a fiscal black hole in the nation’s finances of around £30billion, even after Mr Hunt scrapped nearly all of his predecessor Kwasi Kwarteng’s tax cutting mini-budget.The think tank said spending cuts could be as deep as those needed in the 2009 recession. Chief executive Torsten Bell said the scaling down of the support was a “big deal”. He added: “Our bills are due to hit £4,000 in April – £4,000 is so large that even middle-income households won’t be able to afford those bills next year. “What [the Chancellor] has got to do is some hard work about how he intends to provide support for lower and middleincome households next year.” Energy analysts have predicted annual energy bills could soar to over £5,000 next April and remain high for a “sustained period”. Consultancy firm Cornwall Insight has forecast annual bills to average out at £4,347.69 from April to June, with gas at £2,286.70 and electricity at £2,060.99.
Other data firms have predicted even higher figures. Auxilione stated average bills could hit £5,078 and RBC Capital Markets predicts £4,684 a year. Sarah Coles, personal finance specialist at Hargreaves Lansdown, said: “If [the Government] doesn’t extend some help to medium earners, and wholesale prices remain high, it could send millions of household budgets over the edge.” Nigel Pocklington, chief executive of renewable supplier Good Energy, called for a public information campaign. He said: “We’re an outlier – the only country in western Europe without some kind of national effort around energy efficiency and saving energy. That’s an omission.”