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Progress made in tackling fuel poverty since 1997 is at risk of being obliterated by rocketing energy prices and the Government’s unravelling strategy, warns a coalition of Age Concern, Child Poverty Action Group and National Energy Action. Unless the Government takes immediate action to halt the escalating crisis, up to 5.5 million households, including all pensioners and families on basic benefits, could find themselves living in fuel poverty by the end of the year.¹

Following yesterday’s (Weds 30th April) parliamentary debate on the Energy Bill, and with many of those worried about their rapidly rising fuel bills set to go to the polls today, the coalition is once again renewing its call on the Government to use the Energy Bill to introduce mandatory social tariffs.  This is widely seen as the only way to ensure poorer customers don’t pay more for their energy than other households; even two of the big energy companies have conceded this is necessary.

Predictions of an up to 25% increase in fuel prices this year could see the average annual energy bill sky-rocketing up to £1323. This would make prices more than double² the level of when the Government came to power in 1997, and it is estimated this would push a further one million households, including around half a million pensioners, into fuel poverty.³ New figures reveal that these increases would push all pensioners and families on basic benefits⁴ into fuel poverty:

• The average bill for 65-74 year-olds would soar to £1,262, a huge 19% of the income of a single pensioner on basic benefits and 12.5% of a couple.
• Pensioners aged 75 plus would also be hit hard, with the average bill rising to £1,114 - 16% of the income of a single pensioner and around 11% for a couple.
• Families would have to pay a whopping average bill of £1340, 14% of the income of a lone-parent family and 12% for a couple family receiving basic benefits.
• Energy price increases of 25% this summer would leave an estimated 5.5 million households in fuel poverty – about the same number affected in 1997.5

Gordon Lishman, Director General of Age Concern, said:
“With levels of fuel poverty at risk of returning to levels last seen in 1997, the progress made in recent years is in danger of being obliterated. Like the abolition of the 10p tax rate and the impact of the credit squeeze, rising energy prices are causing significant pain and concern among pensioners and others on low incomes. We [Age Concern] have written to the Prime Minister to ask him to hold an urgent summit to get the Government’s fuel poverty strategy back on track.”

Paul Dornan, Head of Policy for Child Poverty Action Group, said:
“Electricity and gas bills are already a tremendous cost to the poorest families. Urgent action is needed by ministers or next winter will be the most damaging for Britain’s poorest children in a decade. The impact on disabled children who are amongst the most likely to be poor is now a particularly pressing concern.”

Maria Wardrobe, NEA Director of Communications, said:
“The prospect of further increases is deeply disturbing news. We urge Government to take immediate action to restore the Warm Front budget and look at a mandate for a social tariff for those hardest hit.”

With numbers in fuel poverty set to return to the 1997 level, the Government will be further away than ever from its target to eradicate fuel poverty by 2010 in England and 2016 in the UK.  Earlier this week the Prime Minister admitted that he was very worried about the impact of fuel prices on pensioners and families. But fuel price increases show no sign of slowing, and will continue to push the poorest and most vulnerable households into fuel poverty unless radical reforms are introduced urgently.

Key coalition demands to the Government:

• The Government’s fuel poverty strategy should be urgently revised, with new policies and measures announced as soon as possible.
• Mandatory social tariffs for vulnerable households, which offer the lowest market rate, must be made compulsory through the current Energy Bill.⁶
• A commitment to recycle the £400 million in extra VAT revenue the Government is receiving from fuel price increases to fund measures to help those in fuel poverty.
• The Warm Front programme should be urgently reviewed, with funding immediately increased by at least 25% and the maximum grant available under the scheme increased significantly.
• The Winter Fuel Payment should be permanently increased to reflect unprecedented energy price increases in recent years and should also be extended to other vulnerable groups under the age of 60.⁷
• The Government should use statutory powers to abolish unfair pre-payment meter premiums.

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Notes to editors:

1. National Energy Action estimate there are currently 4.5 million households in fuel poverty in the UK. A 1% rise in energy prices forces 40,000 households into fuel poverty. If energy prices increase by 25% this will push a further 1 million households into fuel poverty.
2. The average annual GB energy bill in 1997 was £613 (Source, National Energy Action).
3. Over half of those affected by fuel poverty are pensioners. Age Concern estimates that there are currently around 2.25 million older households living in fuel poverty. An increase of 25% to fuel prices would see this rise to 2.75 million older households.
4. Estimates are based on the annual income of a pensioner for 2008/09 on a full Basic State Pension, Pension Credit, Winter Fuel Payment and the 2008 one-off payment announced in the Budget. For a single pensioner aged 65-79 this would total £6,701 for 2008, for a couple aged 65-79 this would amount to £10,096.20. For a single pensioner aged 80+ this would total £6,851. For families the estimates are based on a family receiving Income Support, Child Benefit and Child Tax Credit. For a lone parent family with children aged 5 and 14 this totals £9,491.56.
5. There were around 5.5 million households living in fuel poverty in the UK in 1998 (Source: BERR). There are no exact figures on fuel poverty available for 1997 as there was no English House Condition Survey in this year, but around 5.5 million households would have been affected at this time.
6. The third reading and report stages of the Energy Bill will take place in the House of Commons on 30th April 2008.
7. This consists of 1.6 million vulnerable households aged under 60 who are eligible for Cold Weather Payments, who are on income support premiums because of long-term illness or disability or because they have young or disabled children. 

For further information, please contact:

• Age Concern: Emma Hayes, 020 8765 7515, emma.hayes@ace.org.uk
• Child Poverty Action Group: Tim Nichols, 020 7812 5216 or 07816 909302,
  tnichols@cpag.org.uk
• National Energy Action: David Bootle, 0191 2615677 or 07984 993579, david.bootle@nea.org.uk
  

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