Money & policy

I Can T Afford To Turn The Oven On 7 4M Households Strugglin

The Bill & Budget desk  ·  2026-08-26  ·  5 min read

Illustration generated for Bill & Budget.

The cost-of-living crisis has been exacerbated by the rising costs of essentials such as food, heating, and clothing. Energy UK warns that "stubbornly high prices over the last few years have left some people needing 'emergency support' over and above the existing £150 Warm Home Discount," and Cornwall Insight predicts a 4% price cap increase will push the typical household bill to £1,729 a year from October. Electricity rates are set to rise from 26.11p to 26.57p per kilowatt hour, and gas from 7.33p to 7.90p. These increases will more than wipe out the VAT cut on electricity bills, leaving many households struggling to make ends meet.

One of the primary reasons individuals are struggling to cope with the cost-of-living crisis is that they are not taking proactive steps to manage their finances. Many are relying on government assistance and temporary measures, such as the Warm Home Discount, to get by. However, these measures are not enough to address the scale of the crisis, and individuals must take responsibility for their own financial management. This includes reviewing budgets, identifying areas where expenses can be cut back, and exploring affordable alternatives for essential items.

The availability heuristic operates here, where readers overestimate the effectiveness of government assistance and temporary measures in alleviating the cost-of-living crisis, because these solutions are more readily available in their minds, and underestimate the impact of their own proactive financial management. For example, imagine a reader who is struggling to afford food and heating, and is relying on the Warm Home Discount to get by. However, if this reader were to review their budget and identify areas where they could cut back on non-essential expenses, they may find that they have more money available to spend on essentials than they thought. By taking proactive steps to manage their finances, individuals can reduce their reliance on government assistance and temporary measures, and improve their overall financial situation.

To take control of their finances, individuals can follow these steps today:

1. Calculate your household's essential expenses, such as food, heating, and clothing, to identify areas where costs can be optimized. Track every pound spent for a month using bank statements or a budgeting app, then categorise spending into fixed essentials (rent, council tax, energy), variable essentials (food, transport, clothing), and non-essentials. Target the variable essentials first: batch-cook meals to cut food waste, switch to own-brand products, and set a strict weekly cash allowance for groceries.

2. Review your eligibility for benefits like Universal Credit, and ensure you're receiving the correct amount, considering factors like income, family size, and disability. Use the government's official benefits calculator or contact Citizens Advice for a full check — many households miss out on hundreds of pounds annually because they assume they don't qualify or don't report changes in circumstances.

3. Explore alternative sources of financial support, such as local charities, food banks, or community organisations, that can provide additional assistance during times of need. Contact your local council's Household Support Fund or welfare assistance scheme for emergency grants, and ask your energy supplier about hardship funds and debt write-off schemes — Energy UK confirms suppliers have "enhanced funding to charity partners" and "debt write-off schemes" available.

In terms of specific numbers, the Personal Allowance for the 2025-26 fiscal year is £12,570, and the Basic Rate upper limit is £50,270. The Additional Rate threshold is £125,140, and the Personal Allowance taper starts at £100,000. These figures are important for individuals to understand, as they can help them navigate the tax system and ensure they are not paying too much tax. If your income sits near £50,270, increasing pension contributions can keep you in the Basic Rate band and preserve your Personal Allowance. If you earn between £100,000 and £125,140, every £2 of income above £100,000 loses £1 of Personal Allowance — creating an effective 60% marginal tax rate — so salary sacrifice into pensions or charitable giving via Gift Aid can restore allowances and reduce your tax bill. Check your tax code on your payslip against HMRC's online tool; an incorrect code could mean you're overpaying by hundreds of pounds a year. By securing the full Personal Allowance, you lower your taxable income by £12,570, which can be redirected to cover essential outgoings such as energy bills, helping to chip away at the £7bn household energy debt highlighted by the Guardian.

The stakes are high for individuals who ignore this advice and fail to take proactive steps to manage their finances. If they do not take control of their finances, they may fall further into debt and poverty, exacerbating the cost-of-living crisis. On the other hand, if they do take proactive steps to manage their finances, they may be able to improve their financial situation, reduce their reliance on government assistance and temporary measures, and build a more secure financial future.

In conclusion, relying on government assistance and temporary measures to alleviate the cost-of-living crisis is insufficient, and individuals must take proactive steps to manage their finances and reduce their expenses to get back on track. By reviewing their budgets, identifying areas where expenses can be cut back, and exploring affordable alternatives for essential items, individuals can take control of their finances and improve their overall financial situation. As the cost-of-living crisis continues to deepen, it is crucial for individuals to take responsibility for their own financial management, and not wait for external solutions to improve their financial situation.

This article is general information about UK personal finance, not financial advice. Figures are accurate as of the date shown and may change. Always check the primary source before acting.