Rising cost-of-living “exacerbating” fuel poverty crisis

The continuing squeeze on household budgets – due to soaring energy prices, increases to the energy price cap, the removal of the £20 Universal Credit uplift, inflation, and the impact of the Covid-19 pandemic – has pushed many people to financial breaking point and exacerbated the fuel poverty crisis.

Fuel Bank Foundation, which provides emergency fuel vouchers to people who can’t afford to top up their prepayment gas and/or electricity meters, said the number of people it had helped at its Fuel Bank centres across Britain increased from 53,422 in 2020 to 93,434 in 2021.

New research by the charity highlights the impact the cost-of-living crisis is having and the harsh reality for families living in fuel poverty. A survey of people helped by Fuel Bank Foundation in the past 12 months found that almost half (49 per cent) face living without heat, light and power every week because they don’t have the money to top up their prepayment meter.

Prioritising household budgets and rationing gas and electricity is also a regular occurrence, with 45 per cent of people surveyed having to ration hot water daily – up from 41 per cent in 2020 – and 14 per cent sacrificing a hot meal to save energy, compared to one per cent in 2020.

Almost all (96 per cent) said they have had to make the choice between topping up their prepayment meter and buying food for their family.

In addition to energy costs, 74 per cent were struggling with other essential household bills, including food, water and council tax.

With the cost-of-living looking set to rise further in coming months, following planned increases to National Insurance and the energy price cap, 87 per cent of households with children and 67 per cent of households without said they are seriously concerned about running out of money to pay for energy.

Ofgem today (Thursday 3^rd February) announced that the price cap will rise by up to 54 per cent on 1^st April, meaning households on a standard variable rate will see their bills increase from £1,277 to £1,971 per annum and those who pay for gas and electricity on a prepayment meter will see their bills rise to £2,017 per year, up from £1,309.

He continued “In December last year, we saw the highest level of demand since Fuel Bank was launched six years ago. Worryingly, the fuel poverty gap is also widening, going beyond the communities and demographic groups traditionally associated with it. For example, 59 per cent of the families we are supporting with fuel vouchers don’t receive help with food for their children, such as free school meals.

“The crisis only looks set to worsen too, following the price cap announcement from Ofgem, which will see energy bills for millions of vulnerable people soar from April and could rise to as much as £321 per month by January 2023, which would be catastrophic for those already living in fuel poverty.” (See Fig.1)

Fuel Bank Foundation is calling for urgent action to be taken by government and the energy industry regulator Ofgem.

“A comprehensive Government funded energy efficiency programme to improve UK housing stock is the only long-term, sustainable solution to the issue of affordability as it helps lift people out of fuel poverty permanently,” said Mr Cole.

“However, this will take time. In the meantime, whilst we welcome the measures announced by Chancellor Rishi Sunak to help alleviate some of the pressure on household finances caused by the energy price hike, they don’t go far enough to support those who need it the most.

“We know that energy takes up a higher proportion of poorer households’ budgets than more affluent ones, so simply increasing the bills of all energy customers to pay for the extra financial support will, in turn, increase energy prices further and push more people into fuel poverty.

“We believe these costs should be funded by general taxation, so that those who can afford to, pay the most.”

Since it was launched in 2015, Fuel Bank Foundation has helped more than half a million people and provided £6.7m worth of fuel vouchers to support vulnerable families and individuals. The scheme works by providing a £49* emergency fuel voucher that can only be used to top up prepayment meters.

Today, Fuel Bank Foundation operates more than 350 Fuel Bank centres across the Great Britain, working with a network of 149 partners, including advice agencies and food bank charities.

To download a copy of Fuel Bank Foundation’s Fuel Crisis Report visit our policy & research page.

*Fuel vouchers are £49 in winter months and £30 from 1^st April to 31^st October.

Fig 1. Forecasted monthly Direct Debit price cap increase vs prepayment meter price cap increases.