Ukraine crisis could push 2m households into fuel poverty

A third of all UK households could end up in fuel poverty as result of the war in Ukraine, a consortium of charities has warned.

Recent analysis from Investec suggested that soaring gas and electricity prices could see the price cap on default tariffs, which is already due to increase to £1,971 in April, rise to well over £3,000 when the following period begins in October.

The End Fuel Poverty Coalition (EFPC) – a group representing more than 50 organisations including National Energy Action – has issued a stark warning that the crisis could leave 8.5 million households unable to heat and power their homes.

This would be 2 million more than the 6.5 million households that the NEA said are already expected to be left in fuel poverty following the price cap hike in April.

The EFPC claimed that without further action from the chancellor in his Spring statement due later this month, more frail and older people will die next winter.

“Disaster”

NEA chief executive Adam Scorer said: “When energy bills hit £2,000 a year, there will be over 6.5 million UK households in fuel poverty.

“Analysts suggest the war in Ukraine could drive average bills to £3,000 per year. This could leave 8.5 million UK households in fuel poverty, denied a warm safe home.

“This is a disaster and inevitably, will lead to more needless winter deaths. Government must address the scale of the problem and use the upcoming economic statement in March to cut energy bills much further for the poorest. It must act now, to protect the most vulnerable, and to save lives.”

Caroline Abrahams, Age UK’s charity director, said energy price rises have pushed older people’s budgets to “breaking point” and that the impact on their health and wellbeing is “likely to be devastating”. Support from the government, she said, was “nowhere near enough”.

Abrahams added: “We are really concerned about those using prepayment meters – typically a more expensive way to pay for your energy – and how many will ration and disconnect from their supply.

“With further increases expected in the autumn, and uncertainty intensified by the invasion of Ukraine, the chancellor must do more to help and ensure that those on low and modest incomes can afford to stay warm without worrying sick about their bills.”

End Fuel Poverty Coalition spokesperson Simon Francis said that based on World Health Organisation modelling, an estimated 80 frail and elderly people die prematurely every day across the UK each winter.

“Unless more support can be provided, the scale of these tragic needless deaths will grow and cause even further devastation to other poorer households. We need urgent help for households in fuel poverty now combined with a long-term plan to improve energy efficiency of our homes and a sustainable, renewable-led, energy mix,” he added.

The stats published by EFPC differ from official government data as the latter’s fuel poverty numbers are subject to a two-year lag.

The latest government figures, published last month, revealed a small drop in the number of households in fuel poverty from 3.18 million to 3.16 million from 2019 to 2020.

Responding to the EFPC figures, a government spokesperson said it did not recognise the projections.

They added: “The government’s most recent data on fuel poverty, released last week, showed the number of households living in fuel poverty in 2020 down by 1.6 million since 2010, and around 20,000 since 2019, with continued reductions projected for the next year.

“The government is taking decisive action to help more than 27 million households with rising energy costs, with a £200 reduction on bills this autumn and a £150 non-repayable reduction in council tax bills. The energy price cap will also continue to insulate millions of customers from volatile global gas prices.”

Wholesale gas prices continued to rise on Friday (4 March), with the front-month National Balancing Point price hitting a new all-time of 500p/th.

“It’s not really about the daily flows and demand at the moment, with Russian pipe gas continuing to flow to western Europe,” said Alex Froley, gas and LNG analyst at price reporting firm ICIS.

“Rather traders are thinking about what might happen if Russia decided to halt flows, or if Europe decided to impose sanctions and stop buying. There’s huge uncertainty.

“High prices and volatility could also themselves put strains on trading companies, who might be dealing with credit concerns or unwinding trading strategies.”

Elsewhere in the sector, Octopus Energy has announced it is the only large supplier not to be increasing its standard variable tariffs (SVT) in line with the April price cap.

For existing customers on its ‘Flexible Octopus’ SVT costs will increase to £1,921 for a typical user (£50 below the price cap). New customers will see their SVT priced at £1,969, £2 below the cap.

The energy retailer said it is also doubling its Octo Assist financial hardship fund to £5 million to help more customers struggling with their bills.