A new report by the Legatum Institute finds that 2.75 million more people will be in poverty this winter if the forecast energy prices rises go ahead. The report also shows that 1.7 million more people will be in ‘deep poverty’.
The report is part of the Legatum Institute’s Autumn Series of papers on priorities for the new government.
The total number of people in poverty in 2019/2020 was 13.9 million. This briefing finds that the total number of people in poverty this winter will be 15.2 million if the energy price cap were frozen at summer 2022 levels but would grow to 16.65 million if the scheduled price increases take place.
This would be a once in a generation rise in poverty. 2.75 million more people will be in poverty this winter if the forecast energy prices rise goes ahead. 1.7 million more people will be in ‘deep poverty’. This would reflect an increase of over 30% on deep poverty levels when compared with 2019/2020.
If the energy price cap is frozen at summer 2022 levels, 1.45 million people would be shielded from poverty and 750,000 people will be shielded from deep poverty. However, the number of people in poverty will still be over a million greater than pre-pandemic levels if there is no further intervention.
Baroness Stroud, the CEO of the Legatum Institute and a former Special Advisor in the Department for Work and Pensions says:
“The government should never have been backed into a corner where it is forced to inject billions to freeze energy prices. However, our data shows that drastic measures are necessary to stop over two and half million more people entering poverty. It is good to see that the Liz Truss is taking this seriously and looking at energy price freezes. This will shield nearly a million and a half from poverty this winter. But if Liz Truss wants to stabilise poverty at pre-pandemic levels, she will need to go further and introduce a 10% uprating of Universal Credit as existing inflation will still hit the poorest hardest.”
“This crisis also carries lessons for the long-term. We must build a nation where all are protected from the conditions that drive poverty and where people and businesses are able to flourish. Our energy policy should focus on an energy supply that is cheap, reliable, and resilient and where we are never again heavily dependent on authoritarian dictators for our energy provision. Sadly, this has not been our recent objective as we have sought to decarbonise without being sufficiently pro-active in the development of alternatives such as nuclear, gas and renewables. Going forwards, we must manage any energy transition in a way that protects the poor and does not lead to dependency on leaders like Vladimir Putin.”
