Poverty groups say Hutton's energy deal is 'not enough'

Consumer groups accused the Government of "failing the most vulnerable" after it struck a fuel poverty funding scheme with the energy companies that they said falls woefully short of the needed remedy.

John Hutton, the Secretary of State for Business, Enterprise and Regulatory Reform, unveiled an accord in which the "Big Six" power suppliers will commit an extra £225m over the next three years to help those in fuel poverty, defined as anyone who spends more than 10 per cent of their income on fuel bills. The deal will help pull 100,000 households out of fuel poverty, the Government claimed, ensuring that its goal of increasing the industry's total annual spend on fuel aid to £150m would be met.

Energy companies pay £50m a year towards fuel poverty relief. Under the new deal, they will raise that by £50m, £75m, and then £100m over the next three years. But they will have breathed a sigh of relief. An extra £225m over three years is a far cry from the £9bn windfall tax that Ofgem, the energy regulator, proposed earlier this year. The Government is keen, however, not to alienate an industry that will need to invest more than £100bn to meet its ambitious goals for new generation and carbon reduction.

Designed – at least in part – to dampen the furore that flared up this year after all of the country's major suppliers ramped up fuel tariffs, the accord had the opposite effect. Allan Asher of energywatch said: "A serious and comprehensive response [to fuel poverty] is needed. This deal is neither, it barely scratches the surface. A wide range of caring and expert organisations working to eradicate fuel poverty have been ignored."

The number of households that have plunged into fuel poverty has jumped to 4.5 million after companies pushed up prices by some 15 per cent this year. The average annual household energy bill is more than £1,000. The increases come at a time of record profits for some of the companies, including the UK's largest, Centrica, owner of British Gas.

Ann Robinson, the head of consumer policy at uSwitch, said: "This is the clearest evidence yet that those in fuel poverty cannot expect the Government to lend them a helping hand out of the trap." An Ofgem inquiry by into competition in gas and electricity supply is ongoing.