Nearly half of all households who cannot afford to heat their homes are in work, a shocking new report reveals.
Damning research from the right-wing think tank Policy Exchange, reveals how the Government is spending less than half of the £1.2 billion needed to tackle fuel poverty in England.
The government is currently investing £490 million a year to move all fuel poor homes in England to a ‘Band C’ energy efficiency rating by 2030. However, Policy Exchange has estimated the true cost to be £1.2 billion a year, leaving a £700 million per year funding gap.
‘Despite some recent improvement, the UK’s housing stock remains woefully inefficient compared to other European countries’, says Policy Exchange.
Policy Exchange calculates that fuel poor households would need to spend up to £1,700 extra a year to heat their homes to a suitable level (between 18 and 20 degrees Celsius).
Just over 1.1 million working households in England are classed as ‘fuel poor’, with 10% of all households in England now living in fuel poverty. The problem is most severe in rural communities, where many homes are off the gas grid.
The research also shows that fuel poverty has been made worse by rising energy bills, with gas prices rising by 128% over the last 10 years.
The findings may play into the hands of the Labour Party, who have pledged to freeze energy prices for 20 months if they win the next general election. Labour claim the move could save average households £120, but cost energy companies around £4.5 billion.
Policy Exchange suggests three ways to meet the gap in current Government funding:
- Energy efficiency subsidies should be more focused on fuel poor households. At present, only 33% of fuel poverty funding actually benefits the fuel poor. Refocusing the Energy Company Obligation (ECO) scheme on fuel poor households would raise £375million a year to allocate to fuel poor households.
- Only 10% of Winter Fuel Payment recipients are actually in fuel poverty. Introducing an ‘opt-in’ for the Winter Fuel Payment could save £400million a year which could be reallocated into energy efficiency measures for the fuel poor.
- Energy efficiency should be viewed as a ‘Top 40’ national infrastructure priority – utilising some of the government’s £100billion infrastructure budget over the next five years.
Author of the report, Richard Howard, said: “The facts paint a startling picture. There are over one million working households struggling to afford their energy bills, and living in under-heated homes.”
A government spokesperson said: “Fuel poverty has fallen year on year under this government, and we’re spending more than ever before to ensure more people stay warm this winter”.
Ed Miliband has challenged David Cameron to fast track legislation giving Ofgem the power to cut energy bills. The Labour leader has also called for a new measure on living standards.
Ed Miliband said: “The key test for success of an economic policy is its impact on living standards for working people and the next government will take radical action to restore the link between the wealth of our nation and family finances.
“Millions of people have been ripped off by the big energy firms who never seem to pass on savings to customers. In the last year, wholesale energy costs have fallen by between 9 per cent and 20 per cent but no supplier has reduced the price of their standard tariff.
“The next government is committed to making to [sic] big changes in our energy market: freezing energy prices until 2017 so that bills can fall but not rise, resetting the market and bringing in a tough new regulator to stop the rip-offs in the future.
He added: “But now George Osborne, who used to warn such measures were impossible, is claiming he understands that the energy market is broken. So next week, we’ll give him, David Cameron and Nick Clegg the chance to help all those families they have been ripped off by the energy companies under this government.
“They have been making noises about energy bills. Now they can put their money where their mouth is because, if we work across party lines, we can bring in new powers for the regulator to cut bills and force energy firms to pass on savings to consumers.
“This can begin in Wednesday with a vote in the House of Commons on fast track legislation.
“This zombie Government has had no new meaningful legislation for months. But, with this vote Parliament can require the government to bring forward fast-track legislation. It would mean we would still do some good before Parliament is dissolved before the General Election. All it takes is other parties to abandon their previous opposition to fixing our broken energy market.”