The number English households struggling to pay their fuel bills could more than double to almost 10 million by 2016 due to rising energy prices and costly green taxes, a Government-commissioned report has found.
Further, the impact of the Government’s green energy policies – designed to make homes more energy efficient and therefore reduce bills in the long-term – will only cut the number of households struggling to pay their bills by 150,000 over the next four years, raising questions over whether the policies are worthwhile.
The “profoundly disappointing” figures mean that the Government will miss its legislative target of eradicating fuel poverty by 2016, the report said.
The findings are contained in the Hills Fuel Poverty Review by Prof John Hills, a London School of Economics academic who was commissioned last year by the Department of Energy and Climate Change (DECC) to examine the issue of fuel poverty.
Prof Hills found that under the current definition of fuel poverty – defined as when fuel bills take up more than 10 per cent of a household’s income – around 4 million of England’s 21.5 million households are struggling to pay their bills.
He warned that this could rise to 9.2 million by 2016, which would be equivalent to 43 per cent of all homes in England.
Even if a proposed new definition of fuel poverty is used – one which takes into account households with lower than average incomes but higher than average fuel costs – Prof Hills said that the number of homes in fuel poverty will rise from 2.7 million to 2.9 million by 2016.
Prof Hills said that there is “no sensible way of measuring fuel poverty which shows the problem will be eliminated on current trends by 2016”.
He said: “There is no doubt that fuel poverty is a serious national problem – increasing hardship, contributing to winter deaths and other health problems.”
“The outlook is profoundly disappointing, with the scale of the problem heading to be nearly three times higher in 2016 – the date legislation set for its elimination – than in 2003.”
Typical household energy bills are expected to hit £1,250 a year by 2020, up from £1,060 in 2010.
One of the key factors behind rising energy costs are DECC-imposed green taxes and levies, which are expected to add up to £200 to bills by 2020.
Prof Hills report said that the green policies will only have a limited impact on cutting fuel poverty, and will only reduce the problem “by a tenth”.
One particular policy called the Energy Company Obligation (ECO), under which energy firms will help make homes greener but pass the cost on to consumers, was labeled as “regressive” as it will actually add to the cost of bills for the UK’s poorest 2 million homes.
The report said that ECO would “lead to further marginalization of some of the most deeply fuel poor houses in England”.
Ed Davey, the Energy Secretary, described fuel poverty as “serious”.
He said: “This Government remains committed to doing all it can to take fuel poverty and make sure that the help available reaches those who need it most.”
He said that Prof Hills’ proposed new definition of fuel poverty is a more sensible and accurate measure of the problem.