Fuel poverty predicted to soar after power firm raises prices

Figures released yesterday revealed that in 2009 – the latest figures available – the number of households suffering from fuel poverty had reached 5.5 million.

In England, the increase was particularly severe – with 4 million fuel-poor households, an increase from 3.3 million in 2008.

And campaign groups said the situation will get worse after British Gas and Scottish Power announced huge price rises.

The other four of the “big six” major energy firms are expected to follow suit over the coming months.

Consumer Focus said as many as 6.4 million households could be in fuel poverty by the end of this year.

“Fuel poverty levels are set to soar as energy price hikes and the cost of investment in making our energy supply more secure and sustainable kick in,” said director of energy Audrey Gallacher. “Increasing energy costs create hardship for millions of the poorest pensioners, families and disabled people, leaving many cutting back on heating or other essentials.

“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.

“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.”

Households are judges as being in fuel poverty if 10 percent of income is spent on keeping properties warm.

The Department of Energy and Climate Change (Decc) said the latest rise in fuel poverty levels, which have been increasing since 2004, was largely due to rising fuel prices.

The majority of fuel poor households across the UK were considered to be vulnerable - those with elderly, disabled or long-term sick people or children.

This week British Gas announced gas and electricity bills would jump by 18 per cent and 16 per cent on average, last month ScottishPower announced a similar hike.

Decc said figures for the levels of fuel poverty for 2010 and 2011 would only be known in the next couple of years – and the effect of the latest rises in household energy bills would not be fully felt until 2012.

Climate Change Minister Greg Barker said: “I know rising energy prices are hitting households hard. These new figures show the old policies to help the most vulnerable were not working.

“That’s why, this year, we’ve introduced the warm home discount which will require the big six energy companies to provide discounts of at least £120 to about 600,000 of the poorest pensioners.”

The Green Deal is the Government’s flagship energy efficiency programme and aims to cover the upfront costs of work on homes to make them more efficient, for example by installing new boilers and insulation. The costs of the scheme will be paid back from savings on people’s bills.

But the Government’s own Committee on Climate Change warned last month that ministers needed to sign up to ambitious targets to ensure the Green Deal delivers emissions cuts and savings on bills.

The committee said the Government should commit to insulating all lofts and cavity walls by 2015 and two million solid walls by 2020 as part of the Green Deal, and that energy companies should be “on the hook” to deliver on the goals.

Earlier this week, Ministers unveiled their plans for reform of the electricity market which they said would deliver the £110bn investment needed in the sector to keep the lights on, cut emissions and keep bills down.

Energy Secretary Chris Huhne said the moves would help reduce the UK’s reliance on fossil fuels and the impact for consumers of rising gas and oil costs.

Decc estimates that introducing the electricity market reforms will add about £160 to bills by 2030, but the current system will cost households £200 a year.