Next few months could be ‘very difficult winter’ for those hit by benefit cuts, business secretary says

Perfect storm of tax hikes, benefit cuts, rising bills, Covid, and supply chain issues is raising concern about coming months

Business secretary Kwasi Kwarteng (Jack Taylor/Getty Images)

The next few months could end up being "a very difficult winter" for those hit by benefit cuts, tax hikes, and rising household bills, the business secretary has said.

Kwasi Kwarteng said the National Insurance hike planned by the government would take effect in April so would be unlikely to hit at the same time as the spike in energy prices.

But he acknowledged that "vulnerable customers" of energy companies would be facing a difficult situation over the winter, especially if they relied on Universal Credit to make ends meet.

He was speaking after the government avoided an embarrassing rebellion on its planned benefit cuts last night, when the Speaker rejected a rebel motion put by Tory MPs protesting against the ending of a £20 uplift.

Alongside the cuts and the tax increase, wholesale gas prices are rocketing in the UK, with heating bills expected to rise over the next few months.

Critics say the UK decision to leave the EU single market in energy and the resulting disruption to supply is responsible for British price rises far outstripping those on the continent but the government claims the issue is "global".

Mr Kwarteng told the BBC: "You're right to mention the National Insurance price tax rise, but of course that kicks in in April, so it's not strictly a winter issue.

"You're also right to say that we face a global energy spike in terms of prices. But I've said that there are mechanisms in place now to protect consumers, I've been very clear that the energy price cap is staying even though some energy companies I read today are asking for it to be removed, I've been very clear that that's staying, so we're protecting customers there.

"We've got the warm home discount, we've got winter fuel payments, which are again focused on the most vulnerable customers.

"So, we're completely focused on helping vulnerable customers through this winter, particularly with regard to energy prices."

Pushed on the issue of Universal Credit, he said: "It's a difficult situation, it could be a very difficult winter.

"That's why, as energy minister, I'm very focused on helping people that are fuel poor. Universal Credit, you will know, is an issue for the Chancellor and the Work and Pensions Secretary, I'm speaking to them a great deal about it."

The prospect of another wave of Covid over the winter and the government's production of a "plan B" with measures to tackle the virus has also raised concerns about how the coming months will play out. It comes alongside looming supply chain problems for British industries.

On ITV's Good Morning Britain programme, the Mr Kwarteng was told that families would face "the choice between heating their homes and staying warm or eating, parents who may forego meals in order to feed their kids. You need to be able to offer them some hope."

The minister responded: "You're right, and that's why I'm very keen to keep the warm home discount and also there are other winter fuel payments that we're looking at."

Asked whether he had requested that Mr Sunak raise the warm home discount the minister said there had been "discussions about the Budget" that he couldn't "possibly preempt or anticipate".

Around 4.4 million households on Universal Credit are set to see their energy bills rise significantly in October - the same month they will typically lose more than 5 per cent of disposable income as the £20-a-week uplift to the benefits payment ends, according to calculations by the Resolution Foundation think-tank.

The government is also set to lift the energy price cap by £139 a year (12 per cent) to £1,277 for a typical gas and electricity customer from October 1. The Government and regulator Ofgem have agreed the price cap will remain in place despite concerns within the energy industry that it could leave some firms unable to pass costs on to consumers and drive them out of business.

Mr Kwarteng said: "I've been very clear that the energy price cap is staying even though some energy companies I read today are asking for it to be removed, I've been very clear that that's staying, so we're protecting customers there.

"We've got the warm home discount, we've got winter fuel payments, which are again focused on the most vulnerable customers. So, we're completely focused on helping vulnerable customers through this winter, particularly with regard to energy prices."