Fighting fuel poverty

If you or someone you know is in fuel poverty, here’s what you can do…

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Fuel poverty is on the increase.

According to the official Committee on Fuel Poverty, over 10% of households in England – that’s 2.4 million homes – are in fuel poverty.

Back in 1996, the number was an alarming 5 million. By 2004, it had dropped to just 1 million.

So why has it risen again – and not just in England, but throughout the UK?

The answer is simple. Higher energy prices.

Gas and electricity bills have risen much faster than inflation, and certainly much faster than average wages over the past decade. This has dragged increasing numbers of people into fuel poverty, including some households on reasonable incomes living in energy-inefficient properties.

That’s why it’s more important than ever that people fight back against fuel poverty by shopping around to make sure they’re on the most competitive tariffs for their gas and electricity.

What is fuel poverty?

How is fuel poverty defined? And why are so many British households in the fuel poverty trap?

The broad definition of fuel poverty is when someone who is on a relatively low income lives in a house that cannot be kept warm at a reasonable cost.

A more precise definition used for a number of years was the ‘10% indicator’, where a household was deemed ‘fuel poor’ if it needed to spend more than 10% of its income on energy.

The latest thinking rests on the phrase Low Income High Costs, which means that a household is in fuel poverty if:

  • it is below the poverty line (income is less than 60% of the UK average)
  • its spending on a reasonable amount of energy would push it below the poverty line
  • it has higher than typical energy costs.

Some fuel-poor households actually spend less than is required to make their home comfortable – but only because they prioritise spending in other areas, such as housing costs, food and other expenses.

The result is that their homes are under-heated and under-lit, and appliances that would normally be used are switched off.

What are the effects of fuel poverty?

Fuel poverty brings misery to millions. It is also a major drain on the country’s resources.

Fuel poverty causes or contributes to:

  • excess ‘winter deaths’ (there are 27,000 such deaths a year in England & Wales)
  • an increase in illness and the consequent strain on NHS and social services
  • high levels of debt on gas and electricity accounts
  • social isolation
  • discomfort, anxiety and stress
  • negative impact on development of children and young adults.

Switching is the solution

The quickest and easiest way to reduce fuel costs is to switch to a cheaper tariff.

According to the energy market regulator, Ofgem, 66% of domestic customers are still on expensive standard variable tariffs*.

That’s around 10 million people – a figure that will include many of those in fuel poverty.

Ofgem says customers can save over £300 by ditching expensive standard variable tariffs for the cheapest deal, usually a fixed-term tariff where the rate per unit of energy is frozen for a stated period.

This might be 12, 24 or even 36 months.

The Ofgem figures match our own. We calculate that the average standard tariff from the Big Six firms, paid on a monthly direct debit basis, is around £1,063 (for typical users).

The cheapest tariffs available via MoneySuperMarket – again, for those with average consumption – are currently 12-month fixed rate deals costing around £800.

That’s an annual saving of over £250. So it’s clear – anyone struggling to pay their energy costs should run a quotation to identify the cheapest tariff for their needs.

In fact, savings of that magnitude mean everyone should run a quotation to see if there’s a better energy deal out there (those already on a fixed-rate tariff should check whether they are liable to an exit penalty for switching early).

You can run a quote in minutes to see what savings are available.

The switch itself should be completed in no more than 21 days.

There’s no need for any work inside or outside the property.

And there’ll be no interruption to supply.

Energy saving tips

Reducing the amount of energy you use will have a big impact on your bills.

  • Turn your thermostat down by 1 degree – you probably won’t notice the difference… until you get your next bill.
  • Bleed your radiators to make your heating more efficient and effective. Follow our step-by-step guide.
  • Lag your boiler, pipes and water tank to safeguard against freezing and increase heating efficiency.
  • Turn off electrical appliances fully when not in use. Leaving them on standby simply wastes electricity. Same goes for when you’re charging devices – once full, disconnect.
  • Fit energy saving bulbs – they cost a bit more, but they last longer and cost less in terms of energy used.
  • Block drafts coming under doors or through windows, keyholes or the letterbox.
  • Turn down your washing machine to 30 degrees – today’s powders will do the job just as well at that temperature.
  • Descale your kettle so it’s working efficiently, and don’t over-fill it – just boil the amount you need. Same applies when cooking – don’t use a bigger pan than necessary, and don’t fill it to the brim.

Insulation is a great way to keep a home snug and warm, whether it’s for a cavity wall or the loft.

According to the Energy Saving Trust, insulation could be worth £300 a year off your heating bills – but remember you might face a hefty initial outlay, unless you qualify for a grant (see below).

You should also think about upgrading your old boiler – they’re graded A to G, with A the most energy efficient. If yours is towards the lower end of the scale, you’d save money in the long run by replacing it.

Help if you’re on benefits

If you’re on certain benefits and own your home or are a private tenant, you might be able to get help for energy-saving improvements.
This could include all or part of the cost of:

  • loft or cavity insulation
  • heating upgrades, including replacing or repairing your boiler.

If you rent your home privately, you must have the owner’s permission to do any work, inside or outside the property.

You must also be in receipt of one of these benefits:

  • Pension Credit
  • Child Tax Credit (and your income is £16,010 or less)
  • Working Tax Credit (and your income is £16,010 or less)
  • Income Support
  • (income-based) Jobseeker’s Allowance
  • (income-related) Employment and Support Allowance
  • Universal Credit (and you earned £1,250 or less after tax in any assessment period in the last 12 months).

For certain benefits, one of the following conditions must also apply:

  • you get Child Tax Credit and your child’s disabled
  • you get Disabled Child Premium
  • you get Disability Premium
  • you get Pensioner Premium
  • you receive a work-related activity or support component - if you’re claiming income-related Employment and Support Allowance
  • you’re 60 or over - if you’re claiming Working Tax Credit
  • you get a limited capability for work or work-related activity element - if you’re claiming Universal Credit
  • you get Disability Living Allowance or Personal Independence Payment - if you’re claiming Universal Credit.

To confirm your eligibility for help under the scheme, contact the Energy Saving Advice Service on Tel: 0300 123 1234, Monday to Friday, 9am to 8pm (calls cost up to 12p per minute from a landline, and up to 45p per minute from a mobile). They’ll also tell you how to apply.

Is Fuel Direct right for you?

Fuel Direct is a scheme where energy payments are deducted directly from benefits.

People on certain benefits might qualify for the ‘fuel direct’ scheme. This is where energy payments are deducted from your benefit, where the amount is fixed by the Department for Work and Pensions.

So if you are receiving Income Support, Pension Credit, Employment and Support Allowance or income-based Jobseekers Allowance, talk to your supplier about fuel direct, as it is usually a cost-effective way to cover your bills.

Other forms of help

Warm Home Discount
The Warm Home Discount gives you £140 off your electricity bill between October and April.

You’ll qualify for the Warm Home Discount if, as of July 10 2016, your name or your partner’s name was on your electricity bill, you were receiving the Guarantee Credit element of Pension Credit and your electricity supplier is listed here.

If you qualify, you’ll get a letter in the autumn or winter, telling you you’ll either get the discount automatically or have to apply by February 28 2017.

If you think you qualify but don’t  receive a letter, you can call the Warm Home Discount Scheme on 0345 603 9430, Monday to Friday, between 8.30am and 4.30pm.

Alternatively, you can write to: Warm Home Discount Team, 2.1.P, Peel Park, Brunel Way, Blackpool FY4 5ES.

The Warm Home Discount will not affect your Cold Weather Payment or Winter Fuel Payment (see below).

If you don’t qualify for the Warm Home Discount because you don’t get the Guarantee Credit element of Pension Credit, you may be able to apply directly to your electricity supplier.

Winter Fuel Payment
This tax-free cash payment of between £100 and £300 can help you to pay your heating bills if you were born on or before May 5, 1953.

Payments go out automatically between November and December each year and should have been in your account by Christmas.

You should get the payment automatically if you get the State Pension or another social security benefit, such as Housing Benefit, Council Tax Reduction, Child Benefit or Universal Credit.

The exact amount received depends on your personal circumstances during the qualifying week beginning September 19, 2016. You can see details here.

Cold Weather Payment
When temperatures really drop, some people are entitled to a special Cold Weather Payment of £25 for every week of very cold weather between November and the end of March.

You’re eligible for Cold Weather Payment if you receive one of the following benefits: Pension Credit, Income Support, income-based Jobseeker’s Allowance, income related Employment and Support Allowance or Universal Credit.

For more information on eligibility, click here.

The payment will come within 14 working days of a very cold spell and is paid into the same account your other benefits go into.

If you have a baby or child under the age of five come to stay with you, there are other things to look out for which are detailed here; similarly if you are to go into hospital, as detailed here.

Finally, if you think you should have received a Cold Weather Payment but haven’t, tell your pension centre or Jobcentre Plus office.

What if you can’t pay your bill?

Many households struggle to pay their energy bills, especially over the winter when consumption is higher, particularly for gas.

If you pay for your energy by direct debit, your provider will work out your likely annual consumption and divide the figure by 12 to even-out the cost over the year.

This helps ease the seasonal pain associated with higher usage in winter.

But for those paying for each bill as it arrives, there is a very real risk of a large winter bill simply stretching the household budget to breaking point.

So what should you do if you simply can’t afford to pay your bill?

The most important message is: Don’t stick your head in the sand!

Contact your energy supplier straight away if you receive a bill you cannot afford.

Your supplier is not allowed to just disconnect your energy supply. They are obliged to offer advice and support, which might include moving you to a cheaper tariff or a different payment method, such as a prepayment meter.

Your supplier should also help you to work out a payment plan so that you can get back on track.
For example, you could pay a certain amount each week towards your debt alongside your current fuel consumption.

The Big Six suppliers have dedicated lines for those worried about paying their bill or struggling with arrears:

  • British Gas 0800 072 8625
  • EDF Priority Service Team 0800 269 450
  • Eon Caring Energy Team 0345 301 4875
  • Npower Spreading Warmth Team 0808 172 6999
  • SSE Careline 0800 622 838
  • Scottish Power Carefree Response 0845 270 0700

If you are not with one of the supplier listed above, you can find your supplier’s contact details on a recent bill or on its website.

If you don’t get in touch with your supplier and there is no improvement in the financial situation, your case could be referred to a debt collection agency.

You could eventually be disconnected, although the supplier must follow a rigorous procedure that is designed to maintain supply if at all possible.
In any event, you’ll be given written notice of at least seven days before disconnection happens.

Disconnection is not permitted between October and March if:

  • you are a pensioner living alone,
  • you live with other pensioners, or
  • you live with children under the age of 18.

Energy suppliers try not to disconnect vulnerable customers, such as the sick or elderly, at any time of year.

If your supply is disconnected, you will need to reach an agreement with the supplier about payments and reconnection. You might have to pay a reconnection fee and administration charges.

If you're struggling to afford your bills or are in debt, consider contacting your Citizens Advice bureau or a money advice charity such as StepChange, which offers free, impartial advice on debt and debt management solutions.

Prepayment meters – all you need to know

If you consistently struggle to pay your bill on time, your supplier might install a prepayment meter.

That would mean you would then have to pay for your energy as you use it, as you would with a pay-as-you-go mobile phone.

If you were in arrears, the meter would be set up to take a contribution towards what you owed.

If you’re already on a prepayment meter you can still switch between suppliers – you can compare prices and switch using our energy comparison service energy comparison service.

You can also get information and switching advice from our team of experts on 0800 177 7087.

*66% of UK consumers are on standard variable tariffs which are on average more expensive than the cheapest deals in the market, Ofgem Retail Energy Market report 2016

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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