Chancellor must do more to help poorest households, charity says

The Stepchange charity survey by YouGov found nearly half of 25-49 year olds expect to struggle to pay bills

A leading debt charity is calling on the chancellor to use this week's Spring Statement to do more to help poorer households.

StepChange is calling on Rishi Sunak to increase welfare benefits and offer more help with energy bills.

Without that, many more people will fall into "problem debt" the charity said.

Mr Sunak told the BBC he cannot "fully protect" people from the consequences of rising prices.

The debt charity wants the government to consider increasing benefits by at least 7% in April to try to match the rate at which prices are rising.

It wants to see more funding for local councils to support people with vouchers, grants or discretionary payments to cover essential bills.

StepChange is also calling for an expansion of the Warm Home Discount and wants energy companies to stop trying to recover debt from people who cannot afford to pay their bills.

It comes as the charity has released the results of a survey, which suggests that one in five people believe they will end up in debt this year and won't be able to pay it back.

Of 1,676 adults surveyed by YouGov for StepChange, 42% of people said they think they will struggle to pay rising energy bills and council tax in the coming months.

Modelling from the debt charity also found that if energy bills hit £3,000 per year - which the industry has suggested could happen - the most financially vulnerable households will be spending £1 in every £6 they earn on energy costs.

StepChange's campaign is the latest in a growing chorus of calls for the government to take further action when the chancellor makes his Spring Statement this week. On Wednesday the chancellor is expected to provide an update on the overall health of the economy, but the Spring Statement does not usually include large changes to tax or spending policies.

Rishi Sunak told BBC's Sunday Morning programme: "I wish government could solve absolutely every problem and that I could fully protect people against all the challenges that lie ahead.

"I can't do that, but what I would say is, I will stand by them in the same way that I have done in the past couple of years."

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Millions of households will see sharp rises in energy bills from next month, when the government's price cap is set to rise.

The higher cap means typical households face paying £1,971 a year from April, 54% more than they pay now, with a further rise expected in October.

The price of petrol and diesel has also soared in recent weeks, worsened by a surge in oil costs due to Russia's invasion of Ukraine.

More than 50 Conservative MPs are calling for a cut in fuel duty to reduce the price of petrol and diesel.

One of them, former housing minister Robert Jenrick said: "I think household incomes are entering a storm and they are going to be battered from all sides, energy, food, interest rates rising and so there is a role from the Treasury now to try to smooth the effect of this shock."

Carl Emmerson, the deputy director of the Institute for Fiscal Studies think-tank told the BBC's Today programme that cutting fuel duty would provide targeted help for individuals and businesses who buy a lot of motor fuel.

He said that the move was something that the chancellor could afford, but added: "I think the problem with cutting fuel duty is that it never turns out to be temporary".

Fuel duty is supposed to rise automatically every year but has been frozen for more than 10 years.

Mr Emmerson also suggested that the chancellor will need to choose between broader help, which will offer some help for most households, or more targeted interventions which would offer greater assistance to those on the lowest incomes.

"If you go broad, you can only really shield people from a bit of the pain", he said.

StepChange chief executive Phil Andrew said that the coming months will be "dire" for financially vulnerable people.

"Government must pull every lever at its disposal in order to protect those on the lowest incomes from the scars of debt and destitution.

"While the initial raft of support announced in February was welcome, the war in Ukraine has exacerbated an already difficult situation and more action is clearly needed," he added.

More on the cost of living:

• EXPLAINED: Why are energy bills so high?

• PRICES: Cost of petrol hits fresh record

• WARNING: UK faces biggest income squeeze in decades

• APPEAL: Campaigner says families need urgent help