Energy Guides

How to get out of fuel poverty

Article updated: Tuesday 26 May, 2009

As energy prices soar, and the cost of living also continues to rise, many more people are struggling to keep up with rising energy costs. And with the average household’s annual bill rising to nearly £1,500, increasing numbers of people are finding themselves in fuel poverty.

• What is fuel poverty
• Who can help?
• Grants
• What the Government is doing
• Energy suppliers can help too
• Switching to save

What is fuel poverty?

According to the government, a household is said to be in fuel poverty if it “needs to spend more than 10% of its income on fuel to maintain a satisfactory heating regime” of 21 degrees in a main living area and 18 degrees in other occupied rooms.

Three main factors have been identified by the government as contributing to fuel poverty:

• The energy efficiency status of the property
• The cost of energy
• Household income.

Through a wide range of schemes and grants, the government was successful in reducing the number of homes in fuel poverty by three million between 1996 and 2005. However, rising fuel prices combined with the ongoing credit crisis mean that the number of homes struggling with their bills is rising again with 5.4 million households currently in fuel poverty.

Who can help?

The government recently unveiled a £910million scheme that would see as many as 11 million pensioners and low-income households qualify for free insulation, helping to improve home energy efficiency and reduce bills, with Gordon Brown planning for six million homes to be insulated by 2011. Those that do not qualify will still get a 50% discount on cavity wall and loft insulation.

However, if you need help paying your bills now, there are other ways that you can get help.

Grants

The Warm Front scheme provides a package of insulation and heating improvements up to the value of £3,500 (or £6,000 if oil central heating is recommended), to low income families and other vulnerable households around England. It is a government-funded initiative, and is available to homeowners and those that rent from a private landlord.

Weekly payments towards your actual heating bills are also offered by the Cold Weather Payments scheme. You don’t have to apply for the payments, as they will automatically be paid to anyone who qualifies and will be made whenever the weather “is recorded as, or forecast to be, zero degrees or below over seven consecutive days during the period from 1 November to 31 March”.

For those aged over 60, Winter Fuel Payments may also be available. The amount that qualifying pensioners receive now depends on various circumstances but ranges from £125-£250 for people aged between 60 and 79 on 21 September 2008 or £200-£400 for those aged 80 or more on 21 September 2008.

You can also check the Energy Saving Trust website for a list of all the grants and schemes that you qualify for in your area.

What the government is doing

As well as the government’s recently announced £1billion energy efficiency scheme - of which £910million will go towards free insulation for low-income households, the government has launched a range of initiatives in recent years to help combat fuel poverty and to get energy suppliers to offer more help to their customers.

It has also put an additional £73million towards the Warm Front scheme and increased Cold Weather Payments.

But it’s not just the most vulnerable that are struggling to pay rising energy bills, and now even those that don’t qualify for free insulation can get a 50% reduction on cavity wall and loft insulation costs.

Energy suppliers can help too

All energy suppliers are required by the government to offer social tariffs to their most vulnerable customers and prices must now equal the supplier’s cheapest deal. So if you’re struggling to keep up with the rising cost of your gas and electricity make sure that you give your energy provider a call to see if they can help.

If you’re not struggling yet but want to reduce bills by making your home more energy efficient almost all suppliers also offer discounts to help with the cost of insulation and alternative energy.

Switching to save

Although gas and electricity costs are rising across the board, switching your energy provider can save you up to £200 since the best deals are invariably reserved for new customers.

Changing the way that you pay for your energy can also save you money, with a move to direct debit payments saving some customers as much as £150.

And in a practice that Gordon Brown says must end, it has recently been reported that prepayment customers - who are usually those on the lowest incomes - are charged an average of £332 a year more than online direct debit customers, a figure that rises to £567 with British Gas (www.britishgas.co.uk).

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