Energy News

Fuel poverty will keep on rising, says report

Friday 16 March, 2012

By Martin Fagan

The Hills Review on fuel poverty says government measures won’t eradicate it.

Despite ministerial assurances that fuel poverty will be eradicated by 2016, a new report says instances will increase three-fold in the next four years.

The report, by Professor John Hills, predicts the problem of households mired in fuel poverty will get worse, despite government’s measures to eradicate it.

A major problem, says Professor Hills, is how the government defines fuel poverty. Currently, a household is deemed to be in fuel poverty if it needs to spend more than 10% of after tax income on energy.

The Professor recommends scrapping this definition and replacing it with one that measures the “fuel poverty gap” which will focus attention on households that are both on low income and have relatively high bills. The new definition includes many lower-income households with relatively high heating and cooking costs that, because of their financial circumstances, can't take advantage of discounts offered by online payment and direct debits.

By this definition, the report finds 7.8 million people were fuel-poor in 2009 (the latest available figures), across 2.7 million households, more than previously thought.

The other doubt cast by the report is that improving the energy efficiency of homes of the less well off will have much less of an impact that the government predicts, with current government plans only reducing fuel poverty by 10% by 2016 rather than eradicating it altogether.

“The report confirms fuel poverty is a major problem for our society,” said Audrey Gallacher, director of energy at watchdog Consumer Focus.

“The review also confirms that the problem will only get worse unless the Government takes concerted action.

“On the current way of reckoning, the number of UK households in fuel poverty is around six million and rising. With energy bills, and fuel poverty levels, set to rise even further, Consumer Focus has called for greater resources to be committed to fighting fuel poverty.

“In particular, some of the billions of pounds of carbon taxes that are raised through consumers’ bills should be recycled away from the Treasury and be directly used to help people struggling to keep warm.”

Responding to the final report into fuel poverty from the Hills’ review, Derek Lickorish, chairman of the government’s Fuel Poverty Advisory Group, said:

“Even with this fundamental change in measurement, the government’s current proposals for tackling fuel poverty remain totally inadequate to the scale of the task.

“The number of fuel poor households helped by Government-backed schemes is likely to more than halve over the next three years, despite fuel poverty levels having almost tripled in five years.

“Carbon taxes, including the carbon floor price, means consumers’ energy bills will increasingly provide further revenue for the Treasury of around £5 billion each year. The Government has options for funding greater measures to cut the bills of the poorest households, but it has yet to demonstrate the political will to use them.”