Energy price rise to throw half-million into ‘devastating’ fuel poverty

Anti-poverty organisations sounded the alarm on Friday after energy regulator Ofgem raised the energy price cap by £139, from £1,138 to £1,277, affecting more than 15 million and sparking fears of families being pushed further into poverty and stalling the post-Covid recovery.

The £139 climb is the largest ever increase to fuel bills. It represents a 12.2 per cent jump, and according to modelling by the End Fuel Poverty Coalition will mean an extra 488,000 UK homes experiencing fuel poverty as Britain hurtles towards winter.

“This unprecedented hike in energy bills comes at the worst possible time for millions of households across the country. It is difficult to put into words just how devastating this news will be for people,” said Simon Francis, coordinator of the End Fuel Poverty Coalition.

“Especially hard hit will be vulnerable customers and those on pre-pay meters who are unable to switch suppliers and will be facing a winter in abject fuel poverty,” he added.

We need a new pricing framework, where poorer people don’t pay higher rates than the richRuth London, co-director of Fuel Poverty Action

Ruth London, co-director of Fuel Poverty Action

As many as 400,000 private renters already face eviction for Covid related rent arrears, according to research from the Joseph Rowntree Foundation, and 1.7 million renting households are worried about paying their next three-month’s rent.

“The hike in fuel costs could be the final nail in the tenancy coffin for these tenants, with homelessness escalating at a cost of billions to the public purse,” said Jacky Peacock, director of Advice For Renters, an advice agency that supports private renters in London.

The price cap, currently £1,138 after rising by £96 a year in April, will climb to £1,277 on October 1.

Prepayment customers will see an increase of £153 – from £1,156 to £1,309.

The energy price cap spike will coincide with a £20-a-week cut to universal credit, which Department for Work and Pensions secretary Thérèse Coffey confirmed in July will be withdrawn at the end of September.

Around 60 Conservative MPs – at least one in seven – oppose the universal credit cut, including six former DWP secretaries such as Tory heavyweights Iain Duncan Smith and David Davis. “The chancellor should see the £20 uplift as an investment, not a burden, and retain it beyond the summer,” Duncan Smith told The Big Issue.

The cat is out the bag. @ofgem have confirmed a price hike on energy bills is on the way and it will be worse than we thought. A 13.1% rise and an extra half a million households in #fuelpoverty. Devastating news. https://t.co/Ki8oPa5CRU

— End Fuel Poverty Coalition (@EndFuelPoverty) August 1, 2021

“This toxic combination of higher prices, reduced incomes and leaky, inefficient housing, will lead to a further surge in utility debt and badly damage physical and mental health this winter,” said Peter Smith, director of policy and research at fuel poverty charity National Energy Action.

Ofgem – the Office of Gas and Electricity Markets, a government regulator – reviews and tweaks the price cap every six months.

Ruth London, co-director of Fuel Poverty Action, called for the government to overturn the way energy prices are set, which she said disproportionately impacts low-income families,

“The massive increase in price-capped energy bills will be a body blow to millions, and advice to shop around for cheaper deals does not add up as a solution,” she said. “If everyone affected switched, the deals would disappear, to cover suppliers’ costs and profits.”

“We need a new pricing framework, where poorer people don’t pay higher rates than the rich.”

London said greater action is needed to make homes more energy efficient.

She added: “Fuel Poverty Action believes the government should investigate a totally new pricing system where everyone is guaranteed — free of cost — the basic energy we need for our homes and our health, while more cost falls on those who are heating mansions or joy-riding into space.”