The Institute of Fiscal Studies Says April Benefits Increase Not Enough to Support Families

Monday 17 January, 2022 Written by 
The Institute of Fiscal Studies Says April Benefits Increase Not Enough to Support Families

CLAIMANTS HARDSHIP - According to the IFS, state aid for the poorest households must double to support them through 2022. Benefits and pensions are currently set to rise by 3.1% in April, a figure in line with the inflation rate when the decision was made last Autumn. According to the Bank of England however, inflation may rise to 6% come April, resulting in a real terms benefits cut of 3%. This will be driven largely by a sharp spike in gas and electricity bills.

Wholesale energy costs have soared over the past year due to huge demand for natural gas in Asia and supply issues in Europe. Customers are partly protected from these costs by Ofgem’s price cap. However, the cap is set to be changed in April. According to sector specialists Cornwall Insights, it could increase by 46%, resulting in an extra £600 on annual energy bills. 

April will also see National Insurance contributions rise by 1.25%, a decision made to help support public funding during the pandemic. The government has faced calls to scrap this in wake of the financial difficulties households could face this year. 

Robert Joyce, Deputy Director of the IFS said: “we have become used to an era of low and stable inflation. But the way in which we increase benefits each April is not fit for the period of high and rising inflation we now face. Benefits are set to rise by 3.1% - last September’s inflation rate”.

“But by April inflation will be about 6%. So the poorest are heading for a 3% year-on-year cut in their real benefit levels and living standards. It would be preferable to raise benefits by the actual inflation rate in April. If that is 6% it would cost an additional £3bn, or £4 ½ bn if the state pension were included. Doing so would compensate benefit recipients on average for higher costs, including energy costs,” he added.

Power Consumption of Typical Home Appliances in Watts

Cost of electricity per hour = Consumed Energy in kWh x Cost of 1 Unit electricity

Cost Per Hour = kWh x Unit Price

E = P x t     …     (Wh)

E = P x t ÷ 1000     …     (kWh)

Energy Cost = Energy Used in kWh x Time in Hours

The following table shows the estimated value of wattage rating (in Watts) for different and common household devices, appliances and equipment.

Electrical Appliance Power Wattage in Watts “W”
Fan 80
LED Light Bulb 25
AC – Air Conditioner 900
Refrigerator 250
Electric Heater 2000
Water Heater 4000
Hair Dryer 1500
Clothes Dryer 3000
Clothes Iron 1400
Dishwasher 1300
Electric Kettle 1700
Toaster Oven 1100
Microwave Oven 1000
Desktop Computer 150
Laptop Computer 100
TV – Television 120
Stereo Receiver 300
Vacuum Cleaner 1200
Washing Machine 1500
Coffee Machine 1000
Blender 500
Water Pump 800
Sewing Machine 100
Thankless Water Heater 15000

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