1.5m UK households will struggle to pay bills in next year due to cost of living squeeze

Think tank calls for goverment to reinstate universal credit payments for struggling households

1.5m UK households will struggle to pay bills in next year in cost of living squeeze (PA )

An estimated 1.5 million households across the UK will struggle to pay food and energy bills over the next year as the cost of living crisis continues to bite, new research shows.

That’s according to the National Institute of Economic and Social Research (NIESR) that predicts the UK will fall into recession this year.

The NIESR urged chancellor Rishi Sunak to take action in order to prevent households from crumbling under debt burdens.

It come as the government faced heavy criticism for failing to provide concrete plans which outline how it will tackle the cost-of-living crisis and support struggling families.

Chancellor is under pressure to deliver emergency financial support (EPA)

“The impact on those households could easily be reduced with no deterioration in the medium-term sustainability of our fiscal position,” NIESR director Jagjit Chadha said.

The think tank has recommended the government reintroduce universal credit at £25 a week, and grant the poorest 40 per cent of households a one-off cash payment of £250.

“Without this targeted support we expect a further increase in extreme poverty,” NIESR said.

NIESR’s proposals would cost £4.2 billion, compared with the £20 billion which Mr Sunak has relative to his self-imposed fiscal rules.

Inflation has reached its highest point in 30 years and the Bank of England has warned the rate of inflation could reach 10 per cent within months.

Two weeks ago, the chancellor said it would be “silly” to offer more support now and he wants to wait until later in the year when the economic outlook would be clearer.

But following the Queen’s Speech, levelling up secretary Michael Gove told Sky News on Wednesday that the government is taking steps to “protect people” who are most vulnerable.

He said: “We’ve already taken steps for example reducing council tax for people who are in particular council tax bands who tend to be at the lower end of the income spectrum, but we also keep a review on a number of things we can do both short-term and long-term.”