25th May 2022

ENERGY AND COST OF LIVING CRISIS DEMANDS EMERGENCY BUDGET

Campaigners have urged the Government to deliver an emergency budget to address the cost of living crisis facing the country.

The End Fuel Poverty Coalition has made the call as Ofgem projections firmed up the nightmare scenario of further energy bill rises this winter. [1]

With the number of homes in fuel poverty expected to surge to 43% by this winter, campaigners have warned only an emergency budget will solve the crisis gripping the country. [2]

A household that was paying GBP1,000 for their energy bills in October 2020 could soon be paying almost three-times that. And with inflationary pressures also affecting food prices, the outlook is bleak.

If fuel poverty levels hit the limits predicted, the End Fuel Poverty Coalition estimates that thousands of additional winter deaths will take place due to cold homes in 2022/23 – mainly among the elderly and vulnerable. [3]

To avoid the predicted disaster, the End Fuel Poverty Coalition, has called on the Chancellor to deliver an emergency budget consisting of:

• A 50% Windfall Tax on all Energy Production Firms Profits yielding revenue in excess of GBP20bn, this may have to be levied every year until the Price Cap returns to a more affordable rate or the market is reformed. [4]

• An annual Anti-Fuel Poverty Payment (AFPP) of GBP1,800 to the lowest income households, including those newly facing fuel poverty this winter. [5]

• A one off £20,000 investment in each of the fuel poor households in the UK that are dependent on oil, LPG or coal for heating to improve their homes so they are well insulated and using a cheaper, less-polluting fuel – heat pump or new night storage heaters.

• In future years, any excess revenue generated by the Windfall Tax could raise additional funding for the Emergency Hardship Funds available to local authorities and charitable organisations working with vulnerable groups to deploy.

In addition to the Windfall Tax, the Government must urgently fulfil the promises made in its 2019 Conservative party election manifesto that would help lower energy bills by investing £9.2bn in the energy efficiency of homes, schools and hospitals in England, including £2.5bn for the Home Upgrade Grant Scheme. To date, less than half of the Government’s 2019 manifesto pledges on fuel poverty have been committed. 

The Coalition has also urged BEIS to launch a fundamental review of the UK Energy Market to address concerns which will persist even after the emergency financial measures suggested. This review should consider alternative proposals put forward by campaigners such as the idea of “social tariffs” or a state-funded energy allowance for all.

For example, the average unit of gas has been sold up to 22 times before it gets to customers’ meters, meaning several private firms all making fuel bills that much higher. Consumers have also been required to bail out the costs of 31 companies going bankrupt as a result of Ofgem’s inadequate regulation. [6]

Dr Brenda Boardman, Emeritus Fellow, Environmental Change Institute, University of Oxford, commented:

“The injustice of it all is just incredible. We desperately need an energy market that is designed around the needs of the consumers, not the needs of the suppliers. This is, after all, a basic necessity, that is ultimately about life and death, as well as comfort, good health and child development.”

A spokesperson for the End Fuel Poverty Coalition added:

“Previous measures implemented by the Government to tackle fuel poverty do not scratch the surface and the majority of the help has gone to all households, not necessarily those in fuel poverty specifically. Significant sums have also been spent on the petrol and diesel rebate, which goes to better-off households, who own cars and drive the most. 

“Only an emergency budget will ensure the measures can be introduced to tackle the cost of living crisis.”

Ruth London from Fuel Poverty Action commented:

“With over 40% of UK households in or heading for fuel poverty, we need more than pitiful handouts to prevent a widespread health crisis, miserable children, and more deaths. The energy system should be turned on its head to ensure we pay less per unit if we use less energy - not more. Ofgem has loaded the costs of failing suppliers onto the standing charge - the part of the bill we  can’t escape no matter how much we cut down. The injustice of this charge must be urgently reversed, as a first step towards #EnergyForAll. Energy security begins at home.”

William Baker from Solutions to Tackle Energy Poverty (STEP) commented:

“We are facing a humanitarian crisis this winter unless the Government takes immediate action to ensure low income households can afford their fuel. It must also embark on an ambitious programme to reduce energy demand by insulating our homes; such a programme will reduce fuel poverty, improve energy security, reduce pressure on our health services and give a much needed boost to the economy”.  

Tamara Sandoul from Chartered Institute of Environmental Health (CIEH) commented:

“Another big rise in the cost of energy will have serious consequences for people’s health and wellbeing. Living in cold homes will hit the most vulnerable hardest – the elderly, those on low incomes, children and those with existing health conditions. The Government needs to act quickly to protect the most vulnerable in our society from the effects of this unprecedented rise in the cost of energy and the cost of living.”

Jo Gilbert from CUBES (Customer Utility Bills Expertly Serviced) commented:

“When thousands of death’s were predicted due to the Covid-19 pandemic the government stepped in and took measures to safeguard the vulnerable. We are now in a very real ‘Poverty Pandemic’ and thousands of people will freeze and die from cold related illness. The government must take immediate action, as they did with covid-19 to prevent this humanitarian crisis from emerging more than it already has.”

Jacky Peacock, Head of Policy at Advice for Renters commented,

“The 450,000 private renters who emerged from the pandemic with arrears of rent. now face unaffordable fuel bills.  Without decisive action now, we will see an explosion of evictions and homelessness with a cost to the public purse in excess of the measures to reduce fuel poverty being proposed by the End Fuel Poverty Coalition.”

 

NOTES TO EDITORS

[1] Ofgem has suggested that the price rise will be an additional GBP829, taking the price cap to GBP2800 - an additional increase in bills of 42%.

[2] The rise in bills will result in an additional number of households in fuel poverty. According to Ofgem across the UK 12m households will be in fuel poverty this winter, 43% of the 28.1m households.

[3] Overall the End Fuel Poverty Coalition and National Energy Action estimate that based on a five year average, between 8,000 to 10,000 people across the United Kingdom die prematurely during the winter due to the impact of cold homes.  This is based on World Health Organisation modelling that at least 30% of Excess Winter Deaths are attributable to a cold home.

In 2019 there were 3.1m households in fuel poverty in England (official Government figures) and the average winter deaths mid-point would have been 9,000 (i.e. 0.3% of fuel poor homes are likely to have registered a “excess winter death”). If the numbers of fuel poor increase to the levels predicted, so could the numbers of people who die as a result of cold homes. If the figures of excess winter deaths remained proportionate to the levels of people in fuel poverty, this could see 22,500 excess winter deaths, pro rata. However, this assumption will need to be tested and checked against official figures in winter 2022/23 so is only for illustrative purposes.

[4] GBP20bn would be raised from Shell and BP alone, based solely on their 2020-21 profits. In the last quarter, their profits were even higher.

[5] GBP1800 based on the difference between the Ofgem prediction for winter 2022/23 and GBP1,000 cap which was more manageable for those in fuel poverty. Alternative measures have been suggested by other campaigners, such as the reversal of Universal Credit cuts or expansion of rebate schemes.

[6] “22 times” churn: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2017/05/European-traded-gas-hubs-an-updated-analysis-on-liquidity-maturity-and-barriers-to-market-integration-OIES-Energy-Insight.pdf (table 4, p11). Experts predict this number may have fallen slightly since the table was compiled, but the principles of the market remain.

“31 suppliers”: https://www.forbes.com/uk/advisor/energy/failed-uk-energy-suppliers-update/