Today’s Universal Credit cut together with spiralling energy costs is set to push millions more into fuel poverty. The number is expected to rise to one in five households this winter with parts of East Anglia particularly hard hit.
For many in East Anglia this winter, the demoralising question may be whether to eat or heat.
Our region has some of the hardest-hit local authorities in the country. Norwich is among the ten worst affected, with King’s Lynn, West Norfolk and Ipswich also having among the most vulnerable energy consumers in England.
Fuel poverty is on the increase
A huge increase in the wholesale price of gas, added to other tough economic factors, will leave millions across the country being forced to make hard choices this winter to avoid falling into debt.
As a result, a phrase we are going to be hearing in the media is “fuel poverty”. The term applies to anyone who, if they spent the amount needed to keep them warm, would then be left with a residual income that would put them below the official poverty line.
Spiralling gas and electricity costs
This increase in fuel poverty will be caused by a convergence of three factors:
- low income
- high fuel prices and
- poor energy efficiency
Since January 2021 the wholesale price of gas has risen 250 percent. The wholesale market is where suppliers like British Gas buy energy. Any increase they pay will be passed on to customers.
According to renewable energy specialist Octopus Energy, nearly half of Great Britain’s power still comes from burning gas. They blame a global dependence on gas and supply problems from Russia. They also take aim at the skyrocketing price of carbon offsets. This is a scheme that allows energy companies to ‘neutralise’ their carbon emissions by investing in ‘green’ projects.
This huge price-rise has a knock-on effect on electricity tariffs as gas is used to generate a third of our electric needs.
Consumers left vulnerable as energy companies go bust
Many of the smaller players in the energy market are unable to pay the higher prices for gas supplies. As a result, quite a few have gone bust – nine in September alone – with more expected by the end of the year. Energy regulator, Ofgem, have stepped in to transfer over two million consumers to new suppliers.
The problem is that many of these consumers had tried to insulate themselves from unexpected price rises and had been benefiting from fixed unit rates. They will now face much higher tariffs with their new provider in a process they had no say in.
Another huge blow to consumers struggling with bills is the big increase to the Energy Price Cap. This is a limit, set by Ofgem, on the maximum amount a provider can charge customers for the energy it supplies.
Energy price cap rise
From 1st October millions of households will face a rise in energy bills that will leave customers up to £246 a year worse off.
With Universal credit payments being cut today by £20 a week and high inflation that’s expected to rise further – it’s likely these increases will drag over a million more households into fuel poverty this winter.
The current estimated 4.1 million households classed as living in fuel poverty is likely to rise to 5.3 million. This would equate to over one in five households in England.
Norwich South MP Clive Lewis said:
Citizens Advice showed that 1.7 million households will face higher energy prices as their suppliers fail, with those on the lowest incomes facing more significant shocks. The Energy and Climate Intelligence Unit says that “families that live in homes with lower energy efficiency ratings are suffering the most financially from global gas price increases.” They will pay up to the equivalent of £246 more on their annual gas bills.
The government’s forthcoming Heat and Buildings Strategy is a vital opportunity to permanently end fuel poverty. Done properly, it could reduce bills, improve health, and cut emissions at the same time.
Labour is now committed to spending £6bn a year over a decade to improve the energy efficiency of homes and cut energy bills, and I’m backing the New Economic Foundation’s Great Homes Upgrade campaign to retrofit 19 million homes by 2030.
‘Cynical ministerial ploy’
Former Prime Minster Gordon Brown has referred to the government’s newly announced £500 million ‘hardship fund’ as a “cynical ministerial ploy”. He called on the Chancellor Rishi Sunak to abandon today’s £20 universal credit cut. Brown cited research by York University that showed the number of households spending over ten percent of their income on energy bills is predicted to reach 3.5 million. He said 2021 is the worst time to be poor in Britain. Food prices are rising, fuel prices are rising, and benefits are being cut.
Will this government realise the desperate situation many are in and reverse planned Universal Credit cuts and protect the most vulnerable? Or will voters speak with their feet after a harsh winter of discontent? The Conservatives may come home to a real fire.
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