June 11 - Fuel poverty facts and how to prevent it

We all know how much energy prices have risen over the last few years. But the reality of the situation may be even more shocking. According to USwitch data, gas and electricity prices have increased by almost £800 between 2004 and 2012. That’s an increase of 151%.

No wonder more people are struggling to meet the costs of escalating energy bills, with our most vulnerable members of society the hardest hit. Due to low incomes and poorly insulated properties, pensioners are one of the most at risk groups for fuel poverty. It’s these factors, combined with rising energy prices, which are the driving forces of fuel poverty.

According to the latest Government figures around 4 million UK households are classed as fuel poor. Of that, something like 2.25 million older households – in the region of 4 million pensioners - are living in fuel poverty.

But of course there’s more to fuel poverty than frightening statistics.

What is fuel poverty?

The Government’s definition of fuel poverty is changing. Previously anyone who spent over 10% of their income to keep their home adequately heated was classed as fuel poor. Dependent on fuel prices, an unexpected increase in electricity and gas prices meant a lot of households suddenly fell into the fuel poor category.

The new definition is a little more complicated but is supposed to deliver more accurate figures. It also prevents a significant group – namely more well off families who could afford to spend 10% of their incomes on energy – being inaccurately classified as fuel poor.

Professor Sir John Hills from the London School of Economics has devised a new definition to replace the 10% rule. Known as the Low Income High Cost (LIHC) definition, to be classed as fuel poor, a household must:

·         Spend more than the UK median (above average) on their energy bills.

·         That expenditure must push it below the poverty line.

Most notably, the LIHC definition allows the Government to work out how much lower fuel bills would need to be, or how much higher household income needs to be, for a household to climb out of fuel poverty.

Here are a few facts about the rising cost of energy*:

·         1 in 10 pensioners are said to be turning off their heating and opting to stay in bed during the cold winter months.

·         A third of people say they have been forced to stop heating certain rooms to bring the cost of their heating bills down.

·         1 in 8 say they plan to turn the heating off in certain parts of their homes in cold weather to reduce fuel bills.

·         64% said they wear extra clothing to keep warm.

·         84% expressed serious concern about rising fuel prices.

How to avoid the fuel poverty trap

The fact is the UK has the oldest housing stock in Europe. Our homes simply aren’t efficiently heated and insulated well enough. Proper insulation and energy efficiency is the key to maintaining a warm home and bringing bills down. Simple measures such as draught proofing windows and doors, installing energy efficient light bulbs and closing curtains after dusk will help, as will loft and cavity wall insulation and fitting a new energy saving condensing boiler replacement. And make sure you’re on the cheapest gas and electricity tariff, too.

The Department of Energy and Climate Change (DECC) has also established some initiatives to help households use less energy. Schemes like the Energy Company Obligation, which provides eligible households with boiler replacement and insulation grants. And Green Deal Finance, which enables households to carry out energy saving home improvements without any upfront cost by way of a low cost loan.

There’s a range of schemes, discounts, offers and trust funds set up to help vulnerable customers. The Warm Home Discount Scheme for example provides assistance to elderly customers on a low income who receive the guarantee part of Pension Credit, including credit towards winter fuel bills and free energy efficient appliances.

Ultimately, regardless of how the Government defines fuel poverty, thanks to our aging and poorly insulated housing stock, it will remain a serious issue for years to come.

*Taken from a 2014 Saga poll of 12,000 people aged 50 plus

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