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Another challenging winter ahead: Fuel Poverty Grips Millions of UK Households

Today marks National Energy Action’s (NEA) Fuel Poverty Awareness Day, which aims to highlight the challenges millions of households across the country are facing this winter. As we enter December and cold temperatures settle in, millions of UK households will face another bleak winter, grappling with the high cost of heating their homes.

The energy crisis has been impacting the UK for two years now, resulting in the NEA estimating that, as of 1 October 2023, 6.3 million UK households are living in fuel poverty, meaning low-income households spend more than 10% of their income on their energy bills.

This winter promises to be more difficult than last for many households, with the removal of the £400 Energy Bills Support Scheme (EBSS), a rise in the daily standing charge, and energy prices still hovering around 80% higher than pre-pandemic levels. Over a third of English households will face higher energy bills this winter, with the poorest tenth of households bearing the worst of the crisis. Government intervention in the market helped many households last winter, but even with this level of support, millions of households still struggled.

Fuel poverty disproportionately impacts the most vulnerable households in our society. This includes those living in low-income households, those in older less energy-efficient homes, as well as those with disabilities or health conditions.  Vulnerability can be persistent or transitory, meaning anyone can become vulnerable at any time.

Energy is an essential service, and for vulnerable customers heating their homes is not just a matter of financial strain – it is also a threat to their physical and mental well-being. This becomes an even more worrying thought when considering Citizen’s Advice polling that shows in the first six months of 2023, nearly 7 million people (including 2.2 million disabled people and 1.2 million children) had to go without heating, hot water, and electricity. 

Energy UK and the industry are proactively addressing fuel poverty, with energy companies investing tens of millions of pounds annually in voluntary programmes to assist their customers. Energy UK is also approaching the conclusion of the third year of its Vulnerability Commitment, a voluntary industry initiative that seeks to protect vulnerable customers beyond the current licence conditions set by Ofgem. There are currently 13 signatories, covering around 90% of the UK domestic market, all of whom have shown numerous examples of initiative and good practice to go above and beyond to help protect their most vulnerable customers. The market conditions that suppliers now operate in are very different to when the Commitment was created in 2020, and to reflect this, we have been reviewing the Commitment to ensure it is still delivering further improvements for vulnerable customers.

Suppliers, however, are not able to solve the wider affordability crisis currently facing UK households on their own. That is why we have been urging the Government to consider an enduring, targeted support mechanism to reach those most in need and to prevent the Government from being forced into last-minute and hugely expensive universal interventions such as the EBSS. This was something the Government committed to consulting on in 2023, and industry, consumer groups and charities remain disappointed that this has not been received.

We know that this will be another very challenging winter for customers, but there is a lot of help available and innovative ways in which industry is aiming to support them. We know that in the long-term the best way to ensure households are protected from high energy prices is to permanently reduce the amount of energy they need. This includes a combination of long-term regulations, financial incentives and policies that work effectively alongside each other to enable improvements in energy efficiency and permanently lower bills. It is evident that this must also include fully funded measures for low-income households.