'Cost of living catastrophe': Families face £1,200 hit as energy bills soar and taxes rise

29 December 2021, 07:14 | Updated: 29 December 2021, 22:00

Families face a cost of living crisis over rising energy and tax bills, it's been warned
Families face a cost of living crisis over rising energy and tax bills, it's been warned. Picture: Alamy

By Will Taylor

Millions of families face a "cost-of-living catastrophe" as taxes and energy bills rise, a stark new report has warned.

They could be set to endure a £1,200-a-year hit on their wallets from next April.

The Resolution Foundation said that will come as the energy price cap gets hiked and the 1.25% rise in National Insurance contributions is introduced.

Compounding that is the forecasted 0.6% rise in inflation.

Torsten Bell, the chief executive of the Resolution Foundation, said 2022 could be defined as the "year of the squeeze".

"The overall picture is likely to be one of prices surging and pay packets stagnating," he said.

Read more: New Covid case record set as govt says people should still enjoy NYE – 'but cautiously'

Read more: How the nation made it through Covid-19 fight in 2021 - the key moments

"In fact, real wages have already started falling, and are set to go into next Christmas barely higher than they are now.

"The peak of the squeeze will be in April, as families face a £1,200 income hit from soaring energy bills and tax rises.

"So large is this overnight cost-of-living catastrophe that it's hard to see how the Government avoids stepping in."

TheEnergyShop boss explains what consumers can do if struggling to pay

Some Conservative MPs worry that cost-of-living problems could see public support for the Government take another hit after weeks of allegations of Downing Street parties while London was under various Covid restrictions.

A Government spokesman said it had brought in a £4.2 billion package of "decisive action" to help families, including reducing the Universal Credit taper and measures to help with bills.

The Resolution Foundation said energy bills could rise by about £500 from April, while the cost of collapsing providers – triggered by rises in the price of gas – would add about £100 on to bills.

Low income families, who spend more of what they earn on energy, will be disproportionately affected, potentially forcing them to spend 12% of their income on power, compared to 8.5% now.

National Insurance contributions will cost the average household £600 a year while real wages "had almost certainly" begun to fall, the foundation said.

It added they might not pick up until late 2022.

More Latest News

See more More Latest News

Kemi Badenoch has been elected as the new Conservative Party leader

Kemi Badenoch says it is 'enormous honour' to be elected new leader of Conservative Party

Janey Godley has died at the age of 63

Scottish comedian Janey Godley died in hospital 'surrounded by her loved ones' aged 63 following battle with cancer

Exclusive
Anthony Scaramucci

Anthony Scaramucci says 'garbage' comments made at Trump rally have 'lit up' Puerto Ricans - and could swing election

billy nighy

Billy Nighy 'stole complete works of Shakespeare from library' to prepare for drama school audition

v

Winner in Conservative leadership contest to be announced this morning

Palma is on lockdown amid warnings of heavy rain

Majorca on lockdown as tourist hotspot faces flooding horror after storm kills more than 200

UK GP visiting senior woman at home

Care homes and GPs could face closure under Labour tax plans, health leaders warn

Rebekah Vardy 'threatens to reignite war with Coleen Rooney'

Rebekah Vardy launches appeal against Wagatha Christie £1.8m costs ruling

Alexandra Palace Hosts Its Annual Fireworks Display Ahead Of Bonfire Night

Bonfire night 2024 forecast: What will the weather be like for fireworks night?

Darrian Williams

Two teen boys found guilty after 16-year-old stabbed to death by masked attackers in Bristol park

Westminster Protest

'Betrayed' farmers to protest over Labour's inheritance tax raid - as Chancellor insists changes are 'fair'

The teen was left to die by the side of road.

Six teenagers arrested after 13-year-old girl left with life-threatening injuries in East Yorkshire stabbing

Israel claims to have killed a high-ranking member of Hamas

Israel 'eliminates' one of Hamas' last high-ranking officials

Prince Andrew, Duke of York and Prince Charles, Prince of Wales attend a Service of Thanksgiving to celebrate Queen Elizabeth II's Diamond Jubilee

King Charles 'finally cuts Prince Andrew off' as he 'axes Duke's annual £1m allowance'

Claw hammer-wielding public schoolboy who attacked sleeping students and teacher handed life sentence

Pictured: Public schoolboy, 17, who attacked sleeping students and teacher with hammers he kept 'for zombie apocalypse'

Emergency and rescue personnel work at the site where a concrete outdoor roof of a train station collapsed in the northern Serbian city of Novi Sad

Train station canopy collapses in Serbia, killing 8 people in horror accident, with more victims still trapped in rubble