Record fuel poverty as energy campaign launches

A campaign group and a consumer organisation have launched a campaign to stop energy companies “ripping off” the public.

In the face of rising energy prices, Which? and campaigners 38 Degrees have launched The Big Switch to get the best prices for gas and electricity for consumers.

To take part in the campaign, consumers are asked to sign up by 31 March. Then, energy companies will be invited to submit deals and take part in a “reverse auction” to find the best price. Everyone who signed up will then be invited to switch, en masse – with the process handled by Which?.

David Babbs, executive director of 38 Degrees, said: “We’re all sick of gas and electricity companies ripping us off. If thousands of customers band together, we’ll have the bargaining power to do something about it.”

But there is a darker side to high energy prices. They are also a significant contributor to fuel poverty, a major social problem in the UK.

What we are talking about is people who are often facing the choice between eating and heating. Jonathan Stearn, Consumer Focus

Fuel prices are just one of the problems – falling household incomes have combined with government cuts to paint a bleak picture for 2012. There are even fears the situation could worsen, as the funding for government energy reforms is raised from levies on consumer bills. In the long-term this could help make the market fairer and greener, the government says; but in the short-term, it could hit some of the most vulnerable people in society very hard.

Just under 7m households are in fuel poverty, according to figures from Consumer Focus, the highest figure ever. The previous spike was in the mid-1990s, but then the numbers dropped before rising again.

The figure has soared by almost 1.5m since 1999, and recent price cuts by the big six energy firms have done little to alleviate the pain, because they do not make up for the steep rises seen in the last few years.

Households are defined by the government as being in fuel poverty if they have to spend more than 10 per cent of their income to keep their home at a reasonable temperature. There are three main factors: high energy prices, poorly insulated homes, and low incomes.

Jonathan Stearn, energy expert at Consumer Focus, told Channel 4 News: “What we are talking about is people who are often facing the choice between eating and heating – parents going without meals to make sure they can keep their homes warm, or old people living in one room for the winter.”

And ultimately, as Mr Stearn explained, this means higher numbers of “excess winter deaths”. Last year there were 25,700.

More than half of all people aged 60 and over and living alone are struggling. Anne Garrett, 61, from Dorset, is one of them. Last year, she ran out of money for heating oil and was living without heating or hot water.

She receives disability living allowance and pension credit, which together make up about £120 a week. But her weekly electricity bill alone is £40.

“It was hell – I felt like I was on my last breath,” she told Channel 4 News. “But I’m only 61 and young in mind – what about the poor elderly ladies who don’t know how to get help and can’t pick up the phone? It’s so sad and it is literally going to kill people off.”

Funding cuts

Some organisations say recent actions by the government have only made things worse – with cuts to key schemes which help the most vulnerable.

For example, funding for the Warm Front scheme, which provides money to help people improve the heating and energy efficiency of their homes, has been cut by two-thirds.

A Department of Energy and Climate Change spokeswoman told Channel 4 News:”The difficult position with the public finances means that we need to be smarter about how we help the most vulnerable, and we have had to make some very tough choices about prioritising the help we provide.”

Government help for the fuel poor this winter
Warm Home Discount scheme – discounts provided by energy companies to low income households
Warm Front scheme (until end 2012/13) – Despite cuts, £143m still available to help people get heating and insulation
Carbon Emissions Reduction target (until end 2012/13) – suppliers required to provide measures to help the vulnerable
Community Energy Saving Programme (until end 2012/13) – local approach to make 90,000 low income homes energy efficient
Winter Fuel Payments – no top-ups this year, but the £300 payments still go to 9m households
Cold Weather Payments – available to households on certain benefits in long periods of very cold weather
Encouraging people to switch suppliers – to get a better energy deal

One of the problems is getting the information on the help available to the people who need it. It was recently revealed that up to £30m remains unclaimed in the Warm Front funding pot, despite the cuts – partly due to the warm winter but mainly because the scheme has not been effectively publicised. The eligibility has also been tightened up – for example, people like Mrs Garrett on disability living allowance are no longer eligible.

Mrs Garrett herself said that finding information and help had proved almost impossible.

Perhaps in response to concerns like these, the government last week sent out 675,000 letters to households in a bid to raise awareness of the Warm Front scheme. A spokeswoman told Channel 4 News there are a number of other initiatives, including winter fuel payments, helping thousands (for more details on the help available, see the grey box).

She also said that there are other steps being taken by the government to deal with fuel poverty in the future, including implementation of the Green Deal, which aims to get more houses insulated.

Some of these plans have also faced criticism. Consumer Focus told Channel 4 News that plans to replace three existing initiatives ending in 2012 and 2013 with the new “energy company obligation” effectively represent a funding cut. But the government says it represents £1.3bn of investment annually.

Regardless of these initiatives, it is difficult to get away from the fact that record numbers of people are in fuel poverty.

For many people, charities are filling the gap. One, the Community Foundation Network, (CFN) delivered 500 litres of heating oil to Mrs Garrett on 23 December.

“I felt like I was at the end of the line – there was one day when I even started thinking silly things, about how I could go on. But then I got the oil. I know I wouldn’t be here today if that had not happened,” she said.

The oil for Mrs Garrett was paid for with money from CFN’s Surviving Winter Appeal. Launched in November and backed by celebrities, it asks people who can afford it to donate their winter fuel payments to those who are struggling financially. Other donations were also welcomed – and in total it has raised £2m and helped 20,000 people. CFN Chief Executive Stephen Hammersley, told Channel 4 News there was still “desperate need”.

“Who knows how long the cold snap will persist, but there is a desperate need that will persist. There’s plenty of time for people to give now and their money can really help,” he said.

Mrs Garrett remains worried about next winter.

There was one day I even started thinking silly things, about how I could go on. Anne Garrett

“The government are not in the real world – I think we’ve just lost it because people don’t matter anymore,” she said.

And charities are warning that cases like Mrs Garrett’s, and worse, could only become more common as cuts hit home.

Hope ahead?

There is hope for people like Mrs Garrett. Fuel poverty is at the top of the government’s “to do” list, and as well as its other strategies, the findings of the Hills Fuel Poverty Review are due in spring, part of the government’s attempt to end fuel poverty by 2016. An interim version of the report did not pull any punches – warning thousands could die – and could lead to improvements.

However, a DECC spokeswoman told Channel 4 News it was too soon to speculate whether the review would lead to a change in its fuel poverty policy. But Consumer Focus’s Jonathan Stearn is adamant that a new strategy must be put in place because the rising fuel poverty numbers prove that the current plans are not working.

“What we have seen under consecutive governments is a recognition that energy efficiency is a key solution but we have not had enough schemes that actually make homes more efficient. The government’s target of ending fuel poverty by 2016 is clearly going to be a very, very hard target to meet given where we are now,” he said.

“We’ve seen the fuel poverty numbers go up and it’s important we have a clear strategy to tackle it – because at the moment we are going in the wrong direction.”