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Double-digit reductions – Is there a cure for fuel vulnerability?

uSwitch research shows what could be achieved from larger tariff cuts, as npower fuel voucher pilot begins

couple concerned about energy bill

You might not have ever been in the position where you can’t heat and light your home, but for millions across the UK this is a reality. Homes are forced to make the decision to turn off power as uSwitch recently revealed how millions choose to go without heat in order to free up much-needed money for daily survival.

With the recent cold snap an unwelcome surprise to Spring and people’s pockets, 4.8 millions consumers are struggling more than ever in spending upwards of 10% of their income on energy bills. What can be done to lift these people out of fuel vulnerability?

Following food banks, there is now a fuel bank scheme

With people having to choose between heating or eating, npower has devised a pilot scheme to help those in need by distributing vouchers through a similar welfare initiative to food banks.

Some of those who use food banks within County Durham, Gloucester and Kingston-upon-Thames will be eligible as part of the scheme, which is in conjunction with the Trussell Trust, Durham Christian Partnership, and National Energy Action.

The vouchers distributed are worth £49, a figure that should keep a prepayment meter topped up and keep a home’s lights and heating on for up to two weeks. The scheme is the first of its kind and has been praised by Labour politicians:

Rt Hon Frank Field MP described the initiative as ‘a breakthrough in the fight back against hunger’.

Although clearly a step in the right direction and a lifeline to those who receive the vouchers, an unavoidable criticism to arise from this type of scheme surrounds the issue of longevity: does it really provide a long-term solution to fuel poverty?

Double-digit reductions could help 1.3 million

The news of the food bank pilot scheme comes in the same week as the latest uSwitch research into fuel vulnerability is published: it analyses the reduction in energy prices that would result in lifting over a million households out of fuel vulnerability.

With the last of the big six (SSE) having now lowered their standard tariff price, 2015 price reductions range from British Gas’ 5% gas cut to EDF’s 1.3%; the average cuts across the big six amounts to just 2.2% — that’s only £28 a year. This tiny figure isn’t the level of change required to make a difference to those who need to benefit from it most.

When the industry has seen wholesale electricity prices reduced by 23% for the period up to Winter 2015/16, it doesn’t seem unreasonable to expect these savings to be passed on in part to consumers with greater tariff cuts. Double-digit cuts of 10% would be an achievable reduction to standard energy tariffs that would see 1.3 million benefit and leave the bracket of fuel vulnerability.

Ann Robinson, Director of Consumer Policy at uSwitch is calling for bigger cuts alongside the company to help those struggling:

“We urge suppliers to look at what more they can do to help customers — many of whom have admitted to going cold this winter simply to cope with energy prices.We believe the Government can also help by extending the Warm Home Discount scheme to help more people struggling with energy costs.”

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