Column: Britain braces for big rise in fuel poverty: Kemp

3 minute read

A view shows a fuel pump at a petrol station in Chelsea neighbourhood, in London, Britain October 18, 2021. Dmitry Zhdannikov/REUTERS

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LONDON, Jan 20 (Reuters) - Britain faces a severe cost-of-living crunch from April, when sharply higher gas and electricity bills will coincide with scheduled tax increases and rapid inflation for other goods and services, which is eroding real disposable incomes.

Even before the pandemic, there were 3.2 million households in England (13.4% of all households in the country) living in fuel poverty, according to the government's own statistics, most recently for 2019.

Fuel poor households were characterised by low incomes and low levels of energy efficiency, which left them needing an extra 216 pounds on average each year to reach minimal acceptable standards of affordability and comfort.

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Fuel poverty was concentrated in some of the most deprived regions of the country, correlating with low average incomes and ageing, low-quality and often badly insulated housing stock.

Fuel poverty affected only 7.5% of all households in the prosperous South East and 10.6% in the South West in 2019 ("Fuel poverty in England", Department for Business, Energy and Industrial Strategy, March 2021).

But fuel poverty rates were much higher in the less prosperous North West (14.5%), North East (14.8%), Yorkshire and the Humber (16.8%) and the West Midlands (17.5%).

Within regions, there were intense pockets of poverty, which explains the relatively high rate of fuel poverty in London (15.2%), one of the wealthiest regions of the country.

More than 20% of households were already fuel poor in local authorities covering Barking and Dagenham, Stoke-on-Trent, Newham, Birmingham, Wolverhampton, Waltham Forest and Sandwell ("Sub-regional fuel poverty in England", Department for Business, Energy and Industrial Strategy, April 2021).

Half of all fuel-poor households were living in homes built before 1945, underscoring the energy problems caused by Britain's ageing housing stock, which is the oldest in Europe and most likely in the world.

Three-quarters of fuel poor homes had either dependent children or someone over the age of 60 living as part of the household; almost half included someone with long-term illness or disability.

As a result, 60% of fuel poor households had already been classified by the government as "vulnerable" before the pandemic.

The subsequent rise in gas and electricity prices, with much larger increases planned from April, will push millions more households into fuel poverty, and those already there deeper into fuel deprivation.

If gas and electricity price increases go ahead as planned, the average household energy bill is forecast to jump from less than 1,300 pounds to around 2,000 pounds per year, according to the Resolution Foundation ("Averting a looming energy bill crisis", Jan. 17).

The impact will be worsened by planned increases in national insurance payroll taxes also scheduled to take effect from April, as well as the rapid rise in other living costs, including food and road fuels.

Elected policymakers will therefore come under intense pressure to defer or reduce some of the planned utility bill and tax increases, or find ways of providing more money to households via increases in benefits and subsidies.

Related maps:

- Map showing fuel poverty by statistical region: https://tmsnrt.rs/33tyJ41

- Map showing fuel poverty by local authority area: https://tmsnrt.rs/3rAI0iz

Related columns:

- Britain's old housing stock emerges as key emissions problem (Reuters, Dec. 2) read more

- Rising energy prices will hit poorest households hardest (Kemp, Sept. 16)

John Kemp is a Reuters market analyst. The views expressed are his own

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Edited by David Evans

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