Energy News

Huge increase of households in fuel poverty

By Martin Fagan - news@consumerchoices.co.uk

One million more households in fuel poverty, and rising energy prices will increase this number in 2011.

The number of UK households in fuel poverty rose by one million in 2009 to 5.5 million, according to new figures from the Department of Energy and Climate Change (DECC) in its Fuel Poverty Statistics 2011 report.

A household is described as being in fuel poverty when it has to spend more than 10% of its income keeping warm. The DECC figures show that 21% of UK homes were in this position in 2009.

Because the DECC calculates fuel poverty figures across two years, price rises that impact on households in 2011 will only be visible in the fuel poverty data in 2012.

Fuel poverty is more prevalent amongst what the DECC refer to as “vulnerable households”, defined as those containing the elderly, children or people who are disabled or long term sick. In 2009, the DECC estimated there were 4.5 million vulnerable households in the UK, up 750,000 from 2008.

The number of UK households in fuel poverty has been increasing since 2003 when only two million households were in fuel poverty. However, the DECC says there was a particularly large increase in fuel poverty between 2008 and 2009, largely due to rising fuel prices. Between 2008 and 2009, gas prices rose by 14% and electricity prices by 5%.

The DECC report points to rising incomes, improvements in the energy efficiency of housing and social and discounted tariffs helping some households from falling into fuel poverty.

“Worryingly, the predictions for fuel poverty in 2011 are likely to be an underestimate, as four of the Big Six have yet to announce their expected price rises,” said Audrey Gallacher, director of energy at watchdog Consumer Focus.

“If these are in line with the increases announced from British Gas and Scottish Power, around 12 million people, or 6.4 million British households, are likely to be in fuel poverty when the latest price rises hit.”

As well as a raft of domestic energy price rises, households have been told that the installation of “smart” energy meters are unlikely to lower energy bills and people are still bracing themselves for the full impact of the climate change levy. This could see energy bills increase by £1,000 a year to fund the switch to green energy and to build new nuclear power stations.