Rising fuel costs to tackle climate change 'hit poor'

According to the Fuel Poverty Advisory Group, energy bills have increased by 125 per cent in the past six years, with the number of households in fuel poverty in England quadrupling as a result.

Some 4.6 million households in England now spend more than 10 per cent of their income on heating their homes – the measure of being in fuel poverty.

While the advisory group said investment in energy infrastructure and measures to reduce greenhouse gases were essential, the cost of these schemes were largely passed on to consumers and bills could soar by a further 50 per cent by 2020.

Such policies hit the poor hardest, while the future of grants to tackle the problem of fuel poverty – such as the Warm Front scheme – is uncertain.

And the Government's plans for a "green deal" scheme to help boost the energy efficiency of homes, with the work to install measures such as insulation paid for by savings on bills, would not work for the poorest.

The Fuel Poverty Advisory Group said many households in fuel poverty under-heat their homes to keep costs down, and would therefore be unlikely to make the savings on their bills needed to pay back the cost of the work.

The Government's advisory group called on ministers to set an immediate and unequivocal goal to eradicate fuel poverty by 2016 and a clear strategy on how the target would be achieved.

The group called for more of the money raised through environmental charges, such as the emissions trading scheme (ETS) to go to tackling fuel poverty.

And energy suppliers should be made to target their energy efficiency programmes, which they are obliged to run, to prioritise those most in need of help.

The Fuel Poverty Advisory Group said the Warm Front scheme, which provides grants for insulation and heating improvements to people and families on benefits, should continue until a successor scheme has been developed.

Under current plans, work under Warm Front will continue until March 2011, but its future is under scrutiny as part of the Government's spending review.

And variable charges for carbon reduction measures should be considered as part of the roll-out of smart meters, based on consumption and the ability to pay, the group suggested.

Group chairman Derek Lickorish said: "Moves to make England greener shouldn't push the poorest households into the red.

"Unaffordable energy bills already cause misery for millions and without urgent action the situation is going to get much worse.

"Energy prices are set to rise, so the Government needs a clear strategy on how it is going to end fuel poverty. The only solution is to make fuel-poor homes more energy efficient."

And he said investment in efficient homes would improve health and create jobs.

A spokeswoman for the Department of Energy and Climate Change said: "We recognise the need to help more of the most vulnerable to keep their homes warm at an affordable cost.

"We will do so by targeting assistance at those most in need, promoting energy-saving measures and greater competition in the energy market to ensure that falling wholesale energy prices get passed on to customers.

"We remain committed to doing all that is reasonably practicable to eradicate fuel poverty in all households in England by 2016."