Grants of £1k needed to heat fuel-poor homes this winter

Vulnerable customers will need up to £1,000 of support to pay their energy bills this winter, a fuel poverty expert has told Utility Week.

Dr Brenda Boardman, a research fellow at University of Oxford, said the government must act urgently and accused it of “making fuel poverty so much worse by its short term, inappropriate and inadequate approach”.

She also voiced her concern that the current focus on support for mortgage holders risked drawing further attention away from the plight of the neediest. She said: “The once-able-to-pay are getting a lot of attention because of current and future interest rates. But for fuel-poor customers the pain started a long time ago and is getting worse.”

Her comments come on the back of a new report from energy retailer Utilita, which issues seven recommendations to government to alleviate fuel poverty ahead of this winter (see below).

Based on analysis of smart meter data from 51,000 financially vulnerable households (classified through take-up of Utilita’s Power Up energy loan scheme) the supplier has identified the need for between £593 and £797 financial assistance to avoid self-disconnections this winter.

However, Boardman told Utility Week: “I would go further than that. I want at least £1,000 to go to these households. If you look back to the price cap level in October 2020, it was half of what is expected this winter. For many people bills were unaffordable even at that 2020 level so the least we can do is get back to that level.”

While the latest official government statistics identify around 4 million fuel-poor households across Great Britain, ONS data indicates this figure could be as high as 10 million this year.

The stance taken by Boardman and Utilita aligns with Utility Week’s Action on Bills campaign, which is calling on government to urgently set out its plans for targeted support before winter is upon us.

Through the campaign Utility Week is also calling for a greater focus on energy efficiency as a long-term solution to cutting bills and for government to share data on vulnerable customers so support can be targeted. Utilita’s report makes similar recommendations. In particular, it calls for an overhaul of the Energy Company Obligation (ECO) scheme, including a new supplier licence condition mandating communication about the scheme to eligible customers. Utilita claims this would remove concerns around marketing consent and allow retailers to proactively target fuel poor households.

The report also demands an immediate end to legacy meter installations and a mandate for suppliers to prioritise smart meters for low-income households.

Utilita chief executive Bill Bullen, who has backed our Action on Bills campaign, said: “The government must not allow one in three households to agonise about the winter ahead, with no guarantee of any financial assistance. Low-income households are less resilient than ever and are already self-rationing both energy and food for fear of what’s ahead.

“Our data shows last winter’s £400 Energy Bill Support credits cut self-disconnections for Smart PAYG households by half – this winter they need to be at least £593. Anything less for these households – and the Department for Work and Pensions knows who they are – will be negligent and will leave the tab to be picked up by the NHS.

“Research has proved that for every £1 spent on reducing fuel poverty, 42p in savings are realised by the NHS. This means that for every £593 direct energy credit provided to alleviate fuel poverty, the NHS would save £250.”

Boardman admitted that identifying fuel poor households was one of the “most difficult questions” but called on government to work with energy retailers to define the eligibility for support.

She added: “The one thing that is absolutely certain is that we want the money to go direct to the energy bill, via the utility I expect. It shouldn’t just be added to the normal universal credit payments.

“But the identification is the problem, particularly because we don’t know how high it goes up the income scale. We know it’s several multiples of 3.6 million households but we just don’t know how many. In that case it makes sense to start dealing with those obviously in need – and those on a prepayment meter seems a good basis.”

Full list of Utilita’s recommendations:

• Immediate ban on legacy meter installs and a mandate for suppliers to prioritise smart installs for low-income households
• Mandate suppliers to communicate the ECO4 scheme with eligible customers as a supplier licence condition
• Redouble efforts to educate households on the help and support available via a smart meter in a new, dedicated marketing campaign
• Revise the ‘all measures’ approach to ECO4 to enable low-income households to benefit
• Approve ECO+ plans
• Announce £593-£797 direct winter energy assistance for the lowest income households
• Revise energy support policies to factor in weather and energy performance certificate data

A spokesperson for the Department for Energy Security and Net Zero said: “Through our £40 billion energy support package we covered around half of a typical household’s energy bill last winter and kept millions of people out of fuel poverty.

“We’re also investing billions in improving energy efficiency and nearly half of low-income homes in England now have a rating of C or above. We want all homes to meet this rating by 2035, forming the best long-term protection against fuel poverty.”

Support for vulnerable customers will be a key part of the debate at Utility Week Forum on 4-5 October. Find out more here.