Additionally, the extension of the Energy Price Guarantee at the level of £2,500 a year for the average household (see the next section) will further reduce financial pressure on low-income families, bearing down on the number in poverty. [...] 3 EXTENDING THE ENERGY PRICE GUARANTEE Context Before the announcement in Budget 2023, the government Energy Price Guarantee was scheduled to be increased from the previous level – equivalent to £2,500 per annum for the average household – to the equivalent of £3,000 per annum for the average household in April 2023. [...] From Q3 2023, the Ofgem tariff cap is projected to fall below the level of the Energy Price Guarantee, even at the lower level of £2,500 per annum.iii Accordingly, the government’s policy will only affect household finances in the first quarter of the 2023-24 financial year, preventing a sharp but temporary increase in household bills. [...] As well as a more accurate reflection of a family’s ability to make ends meet, the SMC’s poverty measure tracks: • The degree to which a family is below the poverty line • The length of time that a family is below the poverty line • The experience of living in poverty. [...] SMC methodology More details of the SMC’s approach to poverty measurement can be found here: 9 ANNEX 2: MODELLING OF ENERGY COSTS The briefing models the likely impact of increases in the energy price cap on poverty in the United Kingdom.
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