Fuel poverty cases could treble over next four years
Simon Read is Personal Finance Editor at The Independent. He edits the Saturday Your Money section and writes the Daily Money column and Wednesday’s Midweek Money section in i newspaper. He also writes for the news and business pages of the Independent and i newspaper and is a regular money commentator on TV station London Live. He has won numerous awards including Consumer Finance Journalist of the Year.
Thursday 15 March 2012
Fuel poverty will soar in the next four years despite Ministerial pledges to eradicate it by 2016, a government-commissioned report published today has warned.
Professor John Hills predicts the scale of the problem will be nearly three times higher in 2016 than in 2003.
The London School of Economics academic was commissioned by the government to produce an independent review of fuel poverty, but his conclusions won't please Ministers.
He said we need to rethink the way we measure fuel poverty. Currently it is based on whether a household needs to spend more than 10 per cent of its income on energy.
But Professor Hills says that is flawed and misleading as it excludes some affected by the problem at some times and includes people with high incomes at others.
He said: “There is no doubt that fuel poverty is a serious national problem - increasing hardship, contributing to winter deaths and other health problems, and blocking policies to combat climate change. But the official measure has fed complacency at times and gloom about the impact of policies at others.”
Instead he proposes measuring a 'fuel poverty gap', which takes account of the fact that lower income households generally pay more for gas and electricity because they are forced to use more expensive metres and can't take advantage of discounts offered by online payment and direct debits.
Professor Hills says that nearly eight million people in England - 2.7 million households - both had low incomes and faced high energy costs in 2009, the most recent year with available data.
With average bills having risen by around 20 per cent since then, the scale of the problem could be much higher.
The households affected face costs to keep warm that add up to £1.1 billion more than middle or higher income people with typical costs, Professor Hills reckons.
He says the fuel poverty gap - already three-quarters higher than in 2003 - will rise by a further half, to £1.7billion by 2016.
It will mean fuel poor households will face costs nearly £600 a year higher on average than better-off households with typical costs.
Professor Hills said improving the energy efficiency of homes of hard-up people can make a substantial difference. But he warned that current government plans to help the fuel will only reduce the problem by a tenth by 2016.
“But this daunting problem is one with solutions,” he said. “Our analysis shows that improving the housing of those at risk is the most cost-effective way of tackling the problem, cutting energy waste, with large long-term benefits to society as a whole.
”We need a renewed and ambitious strategy to do this.“
But Derek Lickorish, chairman of the Government's Fuel Poverty Advisory Group, said the report does not go far enough.
“Despite the undoubtedly rigorous analysis by Professor Hills and his team, slicing and dicing the definition of fuel poverty does nothing to reduce how many people are struggling to keep warm and pay their energy bills,” Mr Lickorish 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.”
He predicted that 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.
“With so many millions of people struggling to afford their energy bills a radical strategy, with much higher funding, is desperately needed, if the Government is to stand any chance of ending the scandal of fuel poverty.
“The Government must grasp the nettle and use carbon tax revenues to increase the help available for the households hit hardest by rising energy bills,” Mr Lickorish said. “The most vulnerable older people, families and disabled people, living in cold homes with high energy bills, need firm action from the Government, not more procrastination.”
The Fuel Poverty Advisory Group argues that the Government's Affordable Warmth proposals - intended to supplement the Green Deal scheme - are not an adequate replacement for the existing Warm Front and will not meet the 2016 target to eradicate fuel poverty, no matter how the problem of fuel poverty is measured.
“There is significant scope to fund a major energy efficiency programme to tackle fuel poverty,” said Mr Lickorish. “This should be on a street-by-street basis in deprived areas to ensure that help is provided to those who are typically hard to reach, with a clear priority to tackle the worst housing stock - usually occupied by those on lowest incomes.”
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