Families in energy inefficient homes to pay £850 higher bills this winter

Families in energy inefficient homes will pay £850 more this winter in energy bills, a leading UK think tank has warned.

Analysis by Resolution Foundation has found bills in January will be £231 higher on average for people in energy performance certificate (EPC) F homes compared to those living in EPC C properties.

EPC measures the overall efficiency of a home, with the scale running from A-G. A is the most efficient a home can be, with G being the least efficient.

Energy bills have already soared in 2022 amid the deepening cost-of-living crisis, with the most recent estimates by experts forecasting the energy price cap will reach close to £3,640 in October.

Read more: ‘Humanitarian crisis’ in UK if action not taken on energy bills, say NHS bosses

And energy consultancy Auxilione has said the price cap may rise to £4,722 in January before hitting £5,601 in April.

However, while energy bills are rising for all households the cost of poorly insulated homes will leave certain groups more affected the others.

A Resolution Foundation report finds families in energy-inefficient homes will be facing monthly gas bills on average £231 higher than those who live in equivalent homes with an efficiency rating of C, the government's target.

This adds up to £849 over the 2022/23 winter period.

"This issue of insulation is especially important because of the fact that almost half (49% of the poorest fifth of households live in homes with uninsulated walls," said the report.

Read more: UK inflation: Food and energy bills to cost more than 50% of your pay

"Although this level is largely consistent across the income spectrum, the financial consequences of living in energy-inefficient homes will hit lower-income families hardest (and, as previously shown, force them to cut back on a higher proportion of their overall spending).

"Had government support to insulate homes not been cut a decade ago, millions of families would be paying hundreds of pounds less for energy this winter."

The UK has some of the worst insulated housing in Europe, in part due to having some of its oldest houses.

Less than 2% of new homes in England meet the top energy efficiency rating.

The Resolution Foundation's analysis comes as figures from the Office for National Statistics (ONS) show the poorest 10% of households are now facing inflation of 9.9% when housing costs are included. In contrast, for the wealthiest households inflation is 7.7%.

Read more: Energy bills could rise to £5,500 next April, says latest dire prediction

This is because households on the lowest incomes spend a greater proportion of their money on essentials which are seeing huge price rises, such as energy and fuel.

The situation is set to get worse this winter. The Institute for Fiscal Studies (IFS) this week warned the poorest 20% are facing inflation of 17.6% by October - with the richest 20% facing inflation of 10.9%.

Watch: Cost of living crisis: Families underestimating how much energy bills will rise, research shows