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Cost of living: UK's poorest households face £800 income gap

A handheld SSE smart meter for household energy usage amid the rising cost of living
Cost of living: Families on lower incomes are still in need of additional support despite the government's energy announcement. Photo: Yui Mok/PA Images via Getty

There is an £800 gap on average between the overall rise in the cost of living and the support package for families on means-tested benefits, it has been revealed.

Due to rising prices and soaring energy bills, low-income families will struggle to meet the £2,900 it will take to cover the basic cost of living this winter, according to new analysis from the Joseph Rowntree Foundation (JRF).

JRF estimates that the cap of £2,500 plus the £400 energy rebate, is worth on average around £900 to a low income family.

Families will receive around £2,100 including the £400 energy rebate, lump sum payments of up £650, and a £150 council tax rebate — leaving them £800 short.

Prime minister Liz Truss announced that energy prices will be capped at £2,500 pounds over the next two years.

Prior to the announcement, the price cap was due to rise by 80% from October to £3,549 a year.

Read more: Cost of living: Disabled households twice as likely to be struggling

“The government’s energy price freeze headed off a stratospheric predicted price increase from October but struggling households remain extremely worried about how they are supposed to fill this gap," JRF chief analyst Peter Matejic said.

“This shows Liz Truss’s job isn’t done. When she unveils further plans as part of her fiscal statement she must remember the many low income families suffering in hardship. They deserve to know what additional support the government will pledge as cost of living pressures continue.”

Despite the prime minster's energy announcement, the End Fuel Poverty Coalition said that 7 million households will still be in fuel poverty this winter.

Read more: Liz Truss's energy bills price cap freeze: What does it mean for me?

A spokesperson from the group said: “While many households will benefit from the price cap freeze, the prime minister offered no detail of any additional support for the millions of households who will be left behind in fuel poverty this winter.

“Many of these people are struggling already and include those who are elderly, disabled or with pre-existing health conditions. Without more support to keep them warm this winter, the pressures on the NHS and social care system will increase.

“And without further investment in measures such as energy efficiency for those homes worst affected by fuel poverty and renewables, the plans will just be an expensive sticking plaster.”

Watch: How to save money on a low income