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Last Updated: Thursday, 26 October 2006, 10:09 GMT 11:09 UK
Cold comfort for the fuel poor
By Allan Asher
Chief Executive, energywatch

For people on low incomes, winter can mean a struggle between keeping warm and paying bills. Allan Asher, head of consumer watchdog energywatch explains why fuel poverty is still a problem in Britain today.

Allan Asher, Chief Executive of energywatch
If you're on a low fixed income, you don't have spare cash to absorb energy price hikes
Allan Asher
It is a miserable fact: keeping a home warm is now an unattainable luxury for more and more people, following the merciless rise of gas and electricity prices over the last three years.

In 2003 there were about 1.8 million vulnerable households in this dire situation, living in fuel poverty.

But with gas prices soaring by 91% and electricity by 60% (average bills are now over 1,000 a year) energywatch estimates that there are now at least three million vulnerable households suffering.

People are fuel poor if they are spending at least 10% of their income on energy and the 'vulnerable' fuel poor include pensioners, low income families with young children and people with a disability or long term illness.

But fuel poverty is not just about low incomes: it's part of a complex picture, linked to multiple deprivation, unaffordable fuel prices, poor housing, inadequate insulation and inefficient heating systems.

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If you're on a low fixed income - you don't have spare cash to absorb energy price hikes.

The cold hard reality is that you have to cut back on heating and/or other essentials.

What's even more scandalous is that Britain has the highest number of avoidable deaths due to winter cold in Western Europe.

Compare this to the below-zero winters of Finland, where winter deaths are far lower - mainly due to the better standard of housing there.

Pre-payment trap

Households on low incomes often use pre-payment meters to budget, yet unbelievably, energy suppliers often charge these households more.

Pre-payment meter (picture: energywatch)
Pre-payment customers pay more than those on standard billing

You could be paying up to 103 a year more for gas and 101 more for electricity than someone who pays quarterly by cash or cheque.

Up to 75% of these meters are imposed by energy suppliers to collect debt - so the poor really do pay more.

The level of concern is so high that energywatch and a coalition of organisations are pressing suppliers to, at the very least, equalise pre-payment charges for both gas and electricity with quarterly cash or cheque payments.

Particularly worrying is the double whammy that faces one million households across Britain with token electricity meters.

These meters have to be manually adjusted after each price rise and many customers have to wait months, even years, for their supplier to come round and update them.

Delays in getting around to people's homes means households can face instant arrears of up to 150 in addition to an overnight price rise shock.

Two electricity suppliers (EDF and Scottish and Southern Energy) only charge the new price once they've changed the meter - energywatch would like all electricity suppliers to follow their lead.

Targets under threat

It was depressing to see that the government's Energy Review in July failed to come up with new plans to address fuel poverty.

Graphic showing how average bills have risen since 2003

No new initiatives. No extra funding. No mention of fuel poverty in the Trade & Industry Secretary, Alistair Darling's statement to the Commons.

Without new policies, the targets from the government, Scottish Executive and Welsh Assembly to eradicate fuel poverty in vulnerable households by 2010 and in all households by 2016 (2018 in Wales) are under threat.

The government must provide an income buffer for all the poorest and most vulnerable households.

A straightforward option would be to increase and extend the Winter Fuel Payment - currently paid to those aged over 60 - to low income families with children and disabled people on low incomes.

Urgent action

Tackling fuel poverty is not just about reducing the price of energy and improving income levels, it is essentially about improving the energy efficiency of homes.

But, so far, government figures show that energy efficiency measures have only reduced fuel poverty by 17% - in the long term energy efficiency should be the main driver in tackling fuel poverty.

The government and the energy suppliers have a responsibility to ensure that people can keep their homes warm.

Urgent action is vital now before winter sets in and people are faced with the stark choice between heating and eating.

At-a-glance: Energy review
11 Jul 06 |  UK Politics

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