Fuel poverty now a reality for 4.5 million Brits

07 March 2008 / by Rachael Stiles
A further 500,000 consumers have been plunged into fuel poverty, bringing the number up to 4.5 million, but only 400,000 customers are on social tariffs, according to new research from uSwitch.com.

The big six energy suppliers' current plans to help those in fuel poverty by offering them social tariffs – intended to be more competitive than standard bills – only allow for giving one million people a helping hand, leaving the other 3.5 million out in the cold.

Pensioners continue to be the hardest hit – energy prices have risen 15 per cent this year but they have only seen their pensions rise by 4.38 per cent, and with Winter Fuel allowances covering just 19.5 per cent of a pensioner's annual energy bills, compared to 34.5 per cent four years ago, they are finding themselves in a considerable black hole which is only set to get deeper.

Over a quarter of other households have been forced to cut back on their heating and are tightening their budgets in other areas to offset the rising energy costs. One in ten people cannot afford to adequately heat their homes, and almost half of consumers are concerned about their heating bills.

Social tariffs are thought to provide aid for those in fuel poverty by offering them lower prices, but this is not always the case; in fact, some are paying more than those who on mainstream plans. People who do not opt for online billing and do not pay by direct debit are also being penalised by some providers, putting those who have pre-pay meters or are without a bank account at a severe disadvantage.

The irregularity of social tariffs can be partially blamed on the lack on an industry standard, because each supplier has its own practices in place and uses different ways of calculating how certain customers should receive various discounts.

If the Government wants to combat fuel poverty, then it needs to look at increasing the Winter Fuel Allowance to give "immediate relief to the elderly", says Ann Robinson, director of consumer policy at uSwitch.com. "It should then work with the energy providers to realise the full potential of social tariffs." she said.

Meanwhile, research from moneysupermarket.com has found that 95 per cent of energy customers feel they are being "ripped off" by their providers, reminding consumers that the recent hikes in energy prices mean it is more important than ever for them to compare gas and electricity suppliers to "get on the cheapest tariff for their area and usage."

Ofgem has announced the launch of a two-year review of the energy regulatory regime, which is intended to make energy more affordable for consumers by encouraging more investment in the industry. Britons are understandably scathing towards companies such as British Gas, which announced a 50 per cent rise in 2007 pre-tax profits just weeks after raising its charges for domestic gas by 15 per cent.

Paul Golby, chief executive of Eon, which took over Powergen, told the Financial Times that stories about how the energy industry is benefiting from forcing more and more people below the fuel poverty line by rising prices are nothing more than "myths", and that "the speculation about companies ripping off customers and making massive profits is fiction."

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