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Coalition calls for action ahead of high profile summit

The Government is failing pensioners and poor families in fuel poverty, according to a coalition of Age Concern, Child Poverty Action Group, and National Energy Action.

As ministers and energy industry leaders prepare for a major summit hosted by Ofgem tomorrow (23 April),¹ new figures show that the average energy bill has tipped the vast majority of single pensioners and lone-parent families entitled to basic state benefits into fuel poverty.²  The coalition is demanding urgent action from the summit to help the almost 1 in 5 UK households – an estimated 4.5 million - living in fuel poverty.³

A household is defined as fuel poor when it spends more than 10% of its income on fuel costs. The new figures published today show that rocketing energy prices have pushed large swathes of the poorest and most vulnerable households into fuel poverty:

• The average fuel bill for someone aged 65-74 has leapt up to £1,010 – 15% of the average income of a 65-74 year old single pensioner and 10% of the income of a 65-74 year-old couple entitled to benefits.⁴
• Over 75s in the same position fare little better, with an average annual fuel bill of £891 – 13% of the average income of a single pensioner.⁵
• Lone-parent families receiving basic state benefits have also been hit hard –  over 11% of their income is taken up by an average fuel bill of £1,072.⁶

With 600,000 households⁷ pushed into fuel poverty by this year’s price hikes alone, the coalition warns that the recent announcement that 100,000 households will be helped by energy suppliers putting an extra £225 million into social assistance schemes, will barely scratch the surface of the fuel poverty crisis.  And, with ministers admitting that the Government’s 2010 fuel poverty target will not be met, the coalition is warning that it must urgently come up with a new strategy backed by a radical package of measures.

Gordon Lishman, Director General of Age Concern, said: “The Government must really switch-on to ending fuel poverty. The figures show that it is failing miserably to help the poorest and most vulnerable pensioners and families affected. The action taken so far is nowhere near enough to help those pushed into fuel poverty this year, let alone in the future. The Government’s fuel poverty strategy is in disarray – ministers must pledge fresh action at tomorrow’s summit.”

Paul Dornan, Head of Policy for Child Poverty Action Group, said: “The poorest families are already struggling to stay out of debt and are often forced to pay much higher than average rates for fuel through pre-payment meters. We need swift government action to protect poor children from fuel poverty, or families will be plunged into debt and left with unacceptable spending choices, like whether their child has a warm coat, a warm home, or a hot dinner.”

Maria Wardrobe, NEA Director of Communications said: “The Government’s responses to fuel poverty are totally inadequate and piecemeal. A concerted, focused approach is required with extra funding and a genuine desire to rid us of this ill. This new evidence which shows that many pensioners need to fork out in excess of £1,000 a year on a minimal pension is scandalous and further speculation over the weekend that fuel prices may rise again this year will fill many with dread.”

With the energy companies warning that energy prices are set to rise again – pushing more and more households into fuel poverty – the coalition is calling on the Government to take bold and decisive action to fulfil its commitment to end fuel poverty.

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.⁸
• 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 60.9
• The Government should use statutory powers to abolish unfair pre-payment meter premiums.
• Fuel poverty strategy needs much stronger co-ordination across government and engagement from DWP, the Treasury and other key Departments.
• The package of measures recently announced by DEFRA to promote energy efficiency should be urgently reviewed to ensure they contribute more to tackling fuel poverty.

-Ends-

Notes to editors

1. Ofgem’s Fuel Poverty Summit will see Ofgem update on the findings from its probe into whether the electricity and gas markets are working well for all energy customers and will consider other key issues of concern in tackling fuel poverty. Participants will include the Secretary of State for Environment, Food and Rural Affairs, Hilary Benn, Secretary of State for BERR , John Hutton, the Energy Minister, Malcolm Wicks, the chief executives of the majority of the big six energy companies and a number of other ministers and stakeholders.
2. 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. For a couple with children aged 5 and 14, their out of work income is £11,282.96, meaning the average energy bill takes up 9.5% of their income. Yet many of these families – such as those on pre-payment meters - will also find themselves paying over 10%. 
3. National Energy Action estimates there are now 4.5million households in the UK in fuel poverty. 
4. Estimate based on 2006 ONS figures on average gas and electricity bills for different age groups taken from family spending report 2007. Figures have been estimated based on the 33.9% increase to the cost of the average fuel bill for all households since 2006 (Source: Energywatch figures).
5. Ibid.
6. Ibid.
7. Source: National Energy Action estimate.
8. The third reading and report stages of the Energy Bill will take place in the House of Commons on 30th April 2008.
9. 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. 

FACTFILE

• Energywatch estimates the average annual energy bill is now £1058.
• National Energy Action estimates that fuel poverty now affects more than three million households in England and approximately 4.5 million in the UK.
• Older people are more likely to be affected by fuel poverty than any other group. Age Concern estimates there are now more than 2.25 million older households in fuel poverty in the UK.
• When the £200 Winter Fuel Payment was first paid it covered over a third of the average fuel bill it now covers less than a fifth.
• There were 22,300 excess winter deaths of older people last year - nearly 90 per cent of all excess winter deaths are of people over the age of 65.
• There are 3.8 million children living below the poverty line in Britain. Nearly half of these families are not in work and many of them are affected by disability or the ill health of a parent or child, which will often result in higher heating and fuel requirements.

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