Energy crisis: Black and Asian people to be hardest hit by end of UK price cap

Scaling back the current Energy Price Guarantee in April will be “a disaster” for Black, Asian and other ethnic minority households who typically spend more on their energy bills, the Race Equality Foundation has said.

The charity was responding to figures provided to NationalWorld by the Office for National Statistics (ONS), which show energy bills for UK households headed by an Asian person were 11.2% higher on average compared to white households before the cost of living crisis struck. Households headed by Black people spent 10.3% more.

Between 2018/19 and 2020/21, the ONS data shows the average annual energy bill for Asian households stood at £1,280, compared to £1,268 for Black households and £1,144 for white households. Those headed by a mixed race person spent the least, at £1,056. The figures are based on a survey of private households, and refer to the ethnicity of the ‘household reference person’ – usually the mortgage or rent payer, or the highest earner.

The biggest disparity for Asian households was on gas expenditure, with average bills 20% higher than for white households (£621 versus £508). For Black households, electricity bills were particularly disproportionately high – £715 compared to £636 for white families, a gap of 11.7%.

The ONS figures do show that Asian households had a higher average disposable income compared to white households. But after taking account of the size and composition of the household (for instance, the number of dependents) white households were better off.

Energy bills have spiralled for households across the UK this year, with the latest ONS inflation data showing consumer electricity prices were up by 65.4% in November compared to a year earlier, while gas prices were up by 128.9% – even with government support schemes designed to mitigate the rising cost of energy.

The Government introduced the Energy Price Guarantee in October, to limit the amount that households pay per unit of energy until April 2023. Based on the amount of energy a typical household uses, this meant an effective cap of £2,500 on the average annual bill – but households that use more energy than average pay more. The ONS figures suggest Black and Asian people are more likely to be spending more than this.

Next April, the Energy Price Guarantee will be scaled back, leaving the typical household facing energy bills of £3,000 per year. Families have also been receiving an additional £400 discount on their energy bills for the October 2022 to April 2023 period – so the increase in bills from April will feel sharper still.

Why are Black and Asian people paying more for energy on average?

Jabeer Butt, chief executive of the Race Equality Foundation, said the ONS energy expenditure figures, “whilst deeply worrying”, were “not surprising”. The charity’s own research has found most Black, Asian and minority communities are more likely to experience housing deprivation, including living in a cold home, compared to their white counterparts, he said.

Ethnic minority households were also more likely to be in rent arrears and struggling to pay bills as the country emerged from the Covid pandemic, he said, adding: “It is very likely that the rise in energy costs has already pushed these households to the cliff edge, even with the support of the ‘energy cap’.

“The impact of [ending the current Energy Price Guarantee] in March 2023 is likely to be damaging for poor people across the country and a disaster for many Black, Asian and minority ethnic households."

The ONS said it had not carried out research into why ethnic minority households face higher energy costs. But other official data examined by NationalWorld shows ethnic minority families are more likely to live in poor quality housing, to be in fuel poverty, and to live in large households.

According to a Department for Levelling Up, Housing and Communities (DLUCH) survey covering the two years to March 2019, only 3% of English households headed by White British people live in homes with a damp problem, compared to 10% of Bangladeshi households, 9% of Black African households, and 8% of Pakistani households. Putting the heating on is one way to combat damp and mould, alongside ventilation.

Department for Business, Energy and Industrial Strategy (BEIS) data for England meanwhile shows that 19.1% of households headed by someone from an ethnic minority were in fuel poverty between 2019 and 2021, compared to only 12.6% of white households. The Scottish government however says there is no significant difference in fuel poverty rates between white and ethnic minority households in the country.

Fewer than one in 25 white people (3.5%) in England live in households of six or more people, according to an ONS survey covering 2018. That compared to one in 25 (5%) mixed race people, one in 12 (8.2%) Indian people, one in seven (13.8%) Black people and more than one in three (35.7%) Pakistani or Bangladeshi people.

Anti-poverty charity the Joseph Rowntree Foundation says its research has found “incredibly high levels of hardship” among minority ethnic households, with 85% of those headed by Black or mixed race people and 82% headed by Asian people reporting going without essentials such as food or utilities in October, compared to 58% of white households. Among white households, 35% were in arrears on at least one household bill, versus 85% of Black and 82% of mixed ethnicity households.

Chief analyst Peter Matejic said: “It is not right that some ethnic minority groups have massively high poverty or deep poverty rates, yet this is the truth of the matter when we look into it.

“The most obvious conclusion raised from looking across this analysis is anger at the injustice of such stark differences in very deep poverty, or risk of going without essentials, by ethnicity. This is coupled with frustration that we cannot fully dig into the reasons for the differences due to lack of available data.

“These injustices aren’t inevitable and the government must accept these are the consequences of their decisions and ultimately act to stop anyone going without what we consider basic essentials in a developed country.”

NationalWorld approached the Cabinet Office for comment but it did not respond. We also approached the Department for Business, Energy and Industrial Strategy (BEIS) – but it did not address ethnic disparities in its response.

“We know it is a difficult time for families across the country,” a spokesperson said. “That is why we have acted swiftly to provide support, including the Energy Price Guarantee, which is saving the typical household around £900 this winter, as well as £400 payments towards bills and £1,200 for the most vulnerable households.

“Last weekend we also launched a new campaign, ‘It All Adds Up’, which will help families reduce their energy bills.”