CampaignsFuel poverty"Don't wait for social tariff changes to reduce your fuel bills" "Don't wait for social tariff changes to reduce your fuel bills"
13/03/2008
The price comparison and switching website uSwitch has described the Chancellor's promise to tackle fuel proverty by compelling energy suppliers to offer more competitive tariffs to less well off households as a "brave attempt" which could prove to be "too little, too late" for millions of vulnerable people.
Since the start of the year, price rises have plunged a further 500,000 people into fuel poverty, bringing the total number of people caught in the trap to 4.5 million.
uSwitch says that the Government has made a brave attempt to tackle the issue of fuel poverty in today’s Budget but still has a long way to go before it eradicates the problem altogether. "The Chancellor announced this would be a Budget of ‘fairness and opportunity’ and indeed, initiatives announced today will benefit some of Britain’s 4.5 million fuel poor, but the measures could be a case of ‘too little, too late’ for millions of other vulnerable households across the UK."
In the Budget, the Government finally lifted the ‘five-year freeze’ on the Winter Fuel Allowance for pensioners, increasing it from £200 to £250 for over 60s and from £300 to £400 for the over 80s. It has also called for lower energy prices for 5 million customers on pre-payment meters and announced an increase to current spending levels on social tariffs - from £50 million to £150 million in the period ahead.
The first increase in the Winter Fuel Allowance since 2003 will see nine million pensioner households better off. The news of additional financial support for Britain’s elderly is welcome, says uSwitch, and will go some way to helping the 27% of pensioner households who are currently in fuel poverty and who are forced to choose between eating or heating.
Until today, the Winter Fuel Allowance covered less than a fifth (19.4%) of a pensioner’s fuel bill. The increased allowance will now cover almost a quarter (24.5%) of a pensioner’s energy bill – a 5% increase – but a far cry from 2003, when the maximum allowance available to 60 – 79 year olds offset 34.5% of their bill. For the Winter Fuel Allowance to offer an equivalent value today to that of 2003 (34.5% of the average annual fuel bill), the allowance would have to rise by a further £104 to £354.
The Government has made a clear call for energy companies to ease the burden for its most vulnerable customers. Although 4.5 million people are currently estimated to be in fuel poverty, 73% of those affected are not pensioners. The Chancellor’s call for a three-fold increase to current spending levels on social tariffs is another step in the right direction, but at this time, it is difficult to identify how many of the 3.3 million people in fuel poverty (who are not pensioners) will actually see any real benefit from this.
Britain’s big six energy suppliers have less than 400,000 people signed up to their social tariffs and, even if suppliers carry through current intentions to boost social tariff provision, they will still be helping less than 1 million consumers. For the Government’s seemingly ambitious plans to be a success, any effort will need to be aggressive, sustained and easy for consumers to access and understand.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: “The Government has attempted to provide a solution to fuel poverty in today’s Budget. The measures announced are certainly a step in the right direction, but they still fall short by some considerable distance. We already know that patchy, piecemeal attempts to tackle this issue do not work. Any measures introduced need to be long-term, sustainable and easy for the fuel poor to access.
“If the Government is truly committed to eradicating fuel poverty in this country then it needs to work with the industry and regulator to fully understand what the issues are and to determine how best to tackle them. Rather than reinventing the wheel, the Government has finally increased the Winter Fuel Allowance. However, for this to be a sustainable proposition in the future, the increase in benefits should be targeted at the elderly in real need only.
“A three-fold increase in the money spent on social tariffs is another positive move, yet the Chancellor was vague in how this will be actioned and until a clear plan is laid out, it’s impossible to tell whether it will truly benefit those who need it the most. Again, the Government must work with energy providers to realise the full potential of social tariffs.
"There must be an industry standard on social tariffs, clear criteria over which consumers should qualify, with help from the Government in identifying them, and a guarantee from suppliers that people on social tariffs will always be paying the lowest available price. This would remove the guess work and provide vulnerable households with a real way out of fuel poverty.
“And of course, households have to start helping themselves too. Vulnerable customers should talk to their supplier to find out what help is available now. Failing that, consumers should look to compare prices and switch to a cheaper provider.”