Federation calls for energy market regulation as a quarter of population set to fall into fuel poverty

8 September 2008
 
Almost a quarter of the population will be in fuel poverty by the end of next year, according to a new report.
 
The research, published by the National Housing Federation, shows that 5.7m households will be spending at least 10% of their income on energy bills by the end of 2009 – an increase of 100% over 2005 levels.
 
With annual electricity bills due to increase to over £500 per year, and gas bills to increase to around £900, by 2010, the report shows that the number of people struggling to pay their bills will increase to record levels.
 
According to the report, 5,720,000 households will be in fuel poverty by the end of next year – compared to 2,400,000 in 2005 (and 3,774,000 at the end of 2007). This means that 13.4m people will be hit by fuel poverty in 2009 – which equates to 23% of the British population.
 
In 2005, the average energy bill per annum was £676. However, next year this is set to rocket to £1,406.
 
The Federation believes that one of the key issues that exacerbates fuel poverty is the way the big energy companies charge people who pay for their gas and electricity via prepayment meters higher tariffs than other customers.
 
More than five million people pay for their energy via prepayment meters and although most of them come from low income backgrounds, the report shows that in 2010 the charges made to them will be up to £65 higher than those for quarterly billed customers.
 
Federation Director of Campaigns and Neighbourhoods Ruth Davison said: “The findings of our survey are shocking and show that we now have a full scale national energy crisis.
 
“The Government needs to grasp the nettle and take strong and radical action to protect the nation’s energy customers.”
 
She added: “Britain is virtually unique in Europe in that our energy suppliers have been privatised and deregulated.
 
“The promise at the time of deregulation was that prices would fall. This has palpably not happened. So, it is now time for ministers to regulate the market.
 
“Energy companies must be regulated so that they can no longer charge prepayment meter customers grotesquely high tariffs, a cap must be put on the prices they charge, and they must be made to use their profits to pay for their social and energy efficiency responsibilities rather than piling these costs on the already crippled consumer.”
 
The report called Energy Prices and Debt was written for the Federation by IPA Energy and Water Economics.