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The Guardian - UK
The Guardian - UK
Business
Zoe Wood

Energy bills: older Britons will pay more but youngest will struggle most, report finds

A central heating radiator dial being turned down at a home in London
A central heating radiator dial being turned down at a home in London. Photograph: Tolga Akmen/EPA

Older people face a bigger income hit from surging energy costs this winter but younger households are more at risk of being unable to pay their bill or getting into debt amid the cost of living crisis, according to a report.

As households across Britain turn their heating on, the research by the Resolution Foundation thinktank found that older generations, in particular the over-75s, will spend a bigger share of their income, up from 5% to 8%, on their energy bills. For those under 50 the proportion is 5%.

But while older households face a bigger increase, it is younger generations, who have endured years of stalled pay growth and high rents, who will struggle most to cope, according to the report.

Even with the government support – which includes the energy price freeze, £400 rebate on bills, and lump-sum payments for vulnerable households – the typical household energy bill will be 83% higher this winter than before the cost of living crisis struck.

“All generations are facing difficulties from the growing cost of living crisis – but different generations are experiencing it in very different ways,” said Molly Broome, an economist at the Resolution Foundation.

“The middle-aged will face the largest bill rises and older generations will see the greatest squeeze on their incomes due to their larger and less energy-efficient homes.

“But it’s younger people who are most likely to struggle to pay rising bills, because they are less likely to have savings to fall back on – and will therefore be forced to either rely on older friends or family members, or might go without heating during the coming cold weather.”

Younger households are up to four times more likely to have prepayment meters, preventing them from being able to spread their energy costs evenly over the year. Close to a fifth of households headed by someone under 30 pay for gas and electricity this way, compared with about 5% of households headed by someone aged 65 and older.

While more than 80% of over-65s could fall back on money in their current account or savings to cover an unexpected expense, fewer than half of 20- to 29-year-olds could do the same.

Middle-aged households, those headed by someone aged between 40 and 64, will see the largest bill increases in cash terms, with typical annual energy bills rising by over £1,000 on pre-crisis levels, to about £2,300. However, this reflects that such households tend to be larger.

With so many households struggling to make ends meet, the Living Wage Foundation campaign group renewed its calls for companies to pay higher hourly wages. It is also waiting to see if the government will increase the legal minimum wage, now £9.50 for adults aged 23 and over, in next week’s autumn statement.

The voluntary living wage is set at £10.90 across the UK and £11.95 in London. The organisation said giving low-paid workers a raise would help tackle in-work poverty and also help reinvigorate the ailing economy with a boost worth £1.7bn.

“With the cost of living rising, it’s never been more important for employers who can, to step up and provide a wage based on the cost of living,” said Katherine Chapman, the director of the Living Wage Foundation.

“In doing so they’ll not just provide security and stability for their workforce, but they will boost the local economy too.”

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