In response to independent research carried out by the Institute of Fiscal Studies (IFS), William Baker, which commissioned the work, said:
‘The research shows low-income households spend more than twice as much of their budget on energy when compared to the highest income groups. This means they live in colder houses, face unmanageable levels of debt and may even be forced to make budgeting decisions as stark as whether to heat or eat. Inflation rates for fuel are already higher than for other goods, and double digit price increases will push millions more on low incomes into fuel poverty.
‘The research reinforces the need for Government and the independent Hills fuel poverty review to identify measures that take full account of the real choices the poorest households have to make. A coherent set of measures that address the particular circumstances of the fuel poor must lie at the heart of reforms of the energy market and the benefits system.’
Consumer Focus would like to see a number of measures introduced to help tackle fuel poverty:
– Energy suppliers need to do more to offer competitive deals that are not paid for by direct debit or are only available online- low income groups tend not to benefit from these types of deals
– Energy companies should take account of the high proportion of low income budgets that is spent on fuel when setting tariffs and agreeing policies such as how to recover arrears
– Government should recognise the spending patterns of low income households when up-rating benefits and tax credits (instead of the current method of using the average basket of goods bought by all consumers). Up-rating should recognise that inflation rates for essentials such as fuel have been much higher than overall inflation rates in recent years – a trend that is forecast to continue in the future.
– The Government should put in place a ‘road map’ that outlines integrated action to tackle the three main causes of fuel poverty: poor energy efficiency, low incomes and high fuel prices.
– Some future price rises will happen due to the cost of replacing Britain’s decaying energy infrastructure and the Government’s policies to de-carbonise the economy. Every step possible must be taken to minimise the impact on low income consumers.
Source : Consumer Focus
