A quarter of households are in fuel poverty
The high cost of energy is forcing growing numbers of UK households, including middle class families, into fuel poverty, according to new research by uSwitch.com, the independent price comparison and switching service. The findings show that 6.3 million or almost a quarter of all households (24%) are now living in fuel poverty, with single working parents the most likely to be fuel poor.
Fuel poverty is where 10% or more of net household income is spent on energy bills. Previously it was seen as an issue affecting mainly pensioners and lower income groups. However, as energy bills have gone through the roof the total number of households in fuel poverty has soared, with the more affluent middle classes now also falling prey.
In just over five years, household energy bills have rocketed by £471 or 71% from £660 a year in 2006 to £1,131 a year today. As a result, a third of households (33%) with an income of up to £30,000 a year are in fuel poverty while one in fifty households (2%) with an income of over £30,000 a year are in fuel poverty. However, these numbers do not take into account ScottishPower's forthcoming price rise and if other suppliers follow suit fuel poverty will only get worse.
More worryingly, the current definition of fuel poverty doesn't take into account housing costs - mortgage or rent payments. There have been calls for the definition to be updated so that fuel poverty would be calculated as 10% of net household income after household spend on mortgage or rent. If this was the case then fuel poverty numbers would rocket to almost 9 million or a third (33%) of all households.
Incredibly, 22% of middle class households would be classed as being amongst the fuel poor, along with 47% of working class households. But the greatest impact would be seen on households made up of a single person who works and families with children and a stay-at-home parent. Both of these groups would see an extra 19% classed as fuel poor if the definition was revised to take into account the cost of keeping a roof over their heads.
However, the highest incidence of fuel poverty would still be seen amongst single working parents where over half of such households (52%) would be in fuel poverty under the proposed new definition. This shows the powerful impact that a combination of high energy costs along with mortgage or rental payments can have on family finances.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "Rocketing energy prices mean that the middle classes are no longer immune to social ills such as fuel poverty. The fact is that we can now find the fuel poor amongst all walks of life and in all types of households. Start to factor in housing costs such as mortgage and rental payments and we are left with the shocking image of a third of all British households living in fuel poverty. The sad truth is that consumers are paying a heavy price for this country's disjointed, incoherent and unaffordable energy policy.
"There is now a real urgency for the Government to get on with its review of fuel poverty so it can relieve the misery facing those who cannot afford to keep warm this winter. But, in the meantime, households have to start protecting themselves and there are two key steps to this: pay the lowest possible price for your energy and learn to use less of it.
"With household energy prices likely to rise again, many households, especially those on tight budgets, may like the security of a fixed price energy plan. But all households should also look to invest in longer-term energy efficiency measures, such as insulating lofts and cavity walls. Those who would struggle to afford this investment should contact their energy supplier to see whether they would qualify for any energy efficiency grants or financial support. Suppliers have a pot of money available to help customers in this way and those who qualify could see their energy bills substantially reduced as a result."