Energy price-cap rise could plunge half a million people into fuel poverty, charities warn

Almost half a million Britons could be plunged into fuel poverty this winter after regulators hiked the energy price cap by £139, charities have warned.

The End Fuel Poverty Coalition estimated that 488,000 more people would be unable to afford to heat their homes, with vulnerable groups most likely to be affected.

Campaigners lined up to condemn the move by energy regulator Ofgem, which comes into force on 1 October at the same time as unemployment is expected to spike and the £20-a-week uplift to universal credit is due to end.

The energy price hike, which applies to people on default tariffs, equates to a 12 per cent rise in bills for around 15 million households. It is the second increase in six months and comes on top of a 9 per cent rise in April this year.

“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.

Jonathan Marshall, senior economist at the Resolution Foundation, said the lowest-income households would see a hit to their incomes three times greater than those with higher earnings.

“Combined with the planned end to the £20-a-week uplift to universal credit, which comes into effect in October, and rising inflation, this risks leaving many poorer families significantly worse off this winter,” he said.

“Going forwards the government must spearhead a successful, permanent switch to cheaper, renewable energy sources – ensuring that this switch is done in a way that minimises the impact on those already in fuel poverty, or at risk of falling into fuel poverty.”

Mr Marshall urged ministers to keep the universal credit uplift and give targeted support to families at risk of falling into fuel poverty.

Around 2.4 million people are already thought to live in fuel poverty in the UK according to government statistics, which indicate that the average household affected would need £334 to adequately heat and power their home.

Citizens Advice warned of a “perfect storm” hitting families this winter as government financial support is withdrawn at the same time as energy prices rise.

“It’s particularly worrying given families on universal credit are far more likely to already be in energy debt,” said James Plunkett, executive director at Citizens Advice.

“With bills rising and incomes falling, many families will find it hard to escape. For many, debt will be the inevitable consequence.

“It all adds to the growing case to rethink the government’s planned cut to universal credit and keep this lifeline which has been vital to keeping so many afloat.”

Campaigners advised people to shop around for better deals before 1 October, but said this was not a solution to the problem. “If everyone affected switched, the deals would disappear, to cover suppliers’ costs and profits,” said a spokesperson for Fuel Poverty Action.

“Finding a better deal is laborious, and suppliers rely on catching out those who are not only cash-poor but time-poor. Placing the onus on victims to individually find an escape from the price hike is a false solution. Change needs to go beyond redistributing poverty.

“With thousands dying of cold every year, the current energy-pricing system – complete with price caps – is not fit for purpose.  As prices rise, a carbon tax rebate would help, but won’t solve this crisis. We need a new pricing framework, where poorer people don’t pay higher rates than the rich.”

Fuel Poverty Action also called for well-insulated housing, more renewable energy, new heating systems, and wages and benefits that meet people’s costs.

“No special provisions or consumer protection will stop fuel poverty from killing pensioners and wrecking childhoods. The pandemic has taught millions that real change can’t wait,” the charity said.