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Pensioners face a fuel bill battle

13 February, 2007

A further 5.9 million have had to turn down the thermostat or cut back on household essentials as a result of soaring power bills.

The study, published by uSwitch.com, the independent online switching and comparison service, highlights the true extent of fuel poverty amongst Britain’s elderly and will cast severe doubts over the Government’s ability to meet its pledge to take all vulnerable households out of fuel poverty by 2010.

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Ann Robinson, Director of Consumer Policy at uSwitch.com, said: “It is a national disgrace for modern Britain to take a backseat and accept the current levels of fuel poverty amongst the elderly.

“This cannot be allowed to continue and it is now time for energy companies to take some responsibility and become accountable for the 2.3 million pensioners living in fuel poverty in this country today. Soaring energy bills are forcing our pensioners into a fuel poverty ghetto where they are compelled to choose between heating and eating.”

Almost a quarter of the elderly are in fuel poverty – with 10 per cent or more of their income going towards energy bills.

This suggests that 2.3 million of Britain’s pensioners are swelling the ranks of the fuel poor, with a further 2.2 million at risk because they are spending 5 – 10 per cent of their income on bills.

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Robinson said: “Energy bills must come down, and now. In 2006, wholesale gas prices fell by over 50 per cent, while consumer gas bills rose by 38 per cent. And yet we are still waiting for energy companies to pass on these price reductions to consumers. So far only one of the big six providers has acted – we still only have vague promises from the others.

“Rather than pensioners shouldering the burden, energy companies should be facing up to their responsibilities and making immediate double digit price cuts, with an overall reduction of 24 per cent for gas and 16 per cent for electricity prices by the end of the year. Ofgem should be crying out for these reductions as a matter of urgency.”

The Department of Trade and Industry estimates that for every 1 per cent increase in gas and electricity bills, a further 40,000 households are plunged into fuel poverty.

Since the end of 2003 gas bills have gone up by £287 while electricity bills have risen by £137.

Last year alone saw a 38 per cent increase in energy prices, but only a 4 per cent increase in the basic pension. The average fuel bill now stands at over £1,100, while the average annual spend on all essential household bills – energy, water, sewerage, home phone and council tax – stands at £2,623.

In contrast, the average pensioner could be living on as little as £9,620 per year after housing costs – meaning that almost 30 per cent of a pensioner’s annual net income is spent on household bills.

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While a pensioner on pension credits is likely to see as much as 19 per cent of their income going on energy bills, a pensioner living on an average gross income of just over £16,000 a year will also be bordering fuel poverty with around 7 per cent of their annual income going on energy bills.