Martin Lewis warns of 'enormous whack' to middle earners when energy rebate ends
People on middle incomes will ‘feel the biggest squeeze’ over the coming year as a result of the Autumn Budget, Martin Lewis has said.
Changes to energy bill support measures mean many earners face an ‘enormous whack’ when their energy payments effectively jump by 41% in April, the personal finance guru warned.
The chancellor, Jeremy Hunt, has introduced a raft of tax rises expected and spending cuts aimed at safeguarding public finances from a moderate but lengthy recession.
Help with energy costs will continue next year but at a lower level, with some of the extra public cash used for more targeted support instead.
The cap on average energy bills will rise from £2,500 now to £3,000 in April, while the £400 universal energy payment rebate paid out this year will not be repeated.
Mr Lewis praised the extra support for low earners, which includes an additional £900 for those on means-tested benefits, but said middle earners may struggle to cope with the ‘enormous whack’ of higher energy bills.
He told LBC Radio on Friday: ‘I was relatively relieved that we saw the uplifting of those who are the poorest in society.’
But he added: ‘Clearly the people who bear the brunt on this, we’re going to have a squeezed middle.’
Mr Lewis, who founded Money Saving Expert, added: ‘This winter the rate for someone on ‘typical use’ is £2,100. Next winter, it’s going to be £3,000. That is an uplift in all bills of 40%.
‘That £3,000 for a typical house – that is an enormous whack. If you are earning £27,000 – £3,000 on energy alone is enormous.
‘That is why it’s people in the middle who are really going to feel the squeeze.’
Living standards are overall expected to fall by up to 7% over the next two years due to a pincer of high inflation and low wage growth, bringing them back to 2014 levels.
The Resolution Foundation think-tank expects the tax changes to reduce the average family’s income by around 3.7%.
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