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Energy bills set to rise at least 14 times faster than wages in 2022

Energy bills set to rise at least 14 times faster than wages in 2022
Even before the new energy price cap was announced, pay growth was failing to keep up with energy bills. Photo: Belinda Jiao/SOPA Images/LightRocket via Getty (SOPA Images via Getty Images)

UK energy bills are set to jump at least 14 times faster than wages this year, new data has shown.

According to new analysis from the Trades Union Congress (TUC), gas and electricity bills are set to increase by 54% when the price cap set by Ofgem is increased in April, while average weekly wages are set to rise by just 3.75% in 2022.

The TUC estimated that record-high energy prices could wipe out the entire value of pay rises this year.

Average wages are forecast to increase by around £1,000 ($1,309) a year in nominal terms, but the rise in the energy price cap in April of £693 will wipe out 70% of these gains.


An anticipated further rise in October could also wipe out any gains altogether. In October the energy price cap is expected to have risen by more than £1,500 for the year.

Even before the new energy price cap was announced, pay growth was failing to keep up with utility bills. Data estimates that since 2010, energy bills have risen at twice the speed of average wages.

Read more: Rishi Sunak announces £350 for UK households energy bills

The TUC said UK households on low incomes will be hit hardest by sky-rocketing bills, and that years of weak wage growth and benefit cuts have left working families “badly exposed” to the cost-of-living squeeze.

Low-paid workers on universal credit (UC) will see their benefits increased by just 3.1%, or £121, over the year from April 2022, leaving many with a large financial deficit.

“Even uprating benefits in line with the expected inflation figure of 8.1% would give families just £6.07 a week, or £316 a year extra — a figure overwhelmed by the rise in energy costs,” the TUC said.

UK workers are currently enduring the longest pay squeeze in more than 200 years with real wages still worth less than in 2008. After more than a decade of pay stagnation real wages are forecast to fall by £50 a month this year.

The trade body has called on the government to come forward with new measures to support struggling families.

It said the previous “energy loans” announced by the chancellor in February were “woefully inadequate”.

Read more: What Ukraine invasion means for consumer prices in the UK

The TUC called on ministers to reduce household costs by:

  • Introducing a windfall tax on energy companies and using the funds to provide energy grants that at least match future rises in the energy price cap for vulnerable households, replacing the inadequate loans of £200 proposed by government;

  • Rolling out a rapid programme of home insulation, targeted at lower income households and delivered by the public sector;

  • Providing a significant boost to UC — the fastest way to get additional funding to families. The TUC believes that UC should be increased to 80% of the real living wage — around £270 a week. Even raising the standard payment in line with current or forecast inflation would go little way to making up the recent £20 per week cut.

  • The five-week wait, the two-child limit and the benefit cap within UC should also be scrapped.

“Everyone who works for a living ought to earn enough to get by. But years of wage stagnation, and cuts to social security, have left millions badly exposed to sky-high bills,” TUC general secretary Frances O’Grady said.

“With households across Britain pushed to the brink, the government must do far more to help workers with crippling energy costs.

“That means imposing a windfall tax on oil and gas profits and using the money raised to give hard-pressed families energy grants — not loans.

“It means a real increase to universal credit to stop low-income workers from being pushed into poverty. That’s the fastest way to get support to families who need it. And it means coming up with a long-term plan to get wages rising across the economy.”

Watch: Why are gas prices rising?