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Fuel poverty can only be tackled with extra heating and insulation grants for millions of householders, the Select Committee on Business and Enterprise has said.

The MPs' report Energy Prices, fuel poverty and Ofgem  said a “fundamental re-think” of the government’s fuel poverty policy was needed as more and more people struggle to cope with rising energy bills.

The select committee cast doubt on the government’s ability to reach its target of eradicating fuel poverty for vulnerable households by 2010. 

It said an estimated 4.5m UK households were “fuel-poor”, defined as households that spend more than 10 per cent of income on heating, and a further 400,000 people fall into fuel poverty with every 10 per cent increase in bills.

They include not just older people but families with children, disabled people, and those with long-term illnesses, according to the committee, chaired by Conservative MP Peter Luff.

The committee’s report calls on the government and energy companies to help people make their homes more energy-efficient, rather than subsidising their fuel bills through benefits.

There are two initiatives designed to help low-income and elderly consumers invest in better household insulation, and cut carbon emissions and reduce fuel bills at the same time.

These are the Carbon Emissions Reduction Target, which applies to energy suppliers, and the government’s Warm Front programme.

Energy suppliers could afford to invest more in the first scheme thanks to windfall gains made in the EU’s carbon trading scheme, the report says. They should also have to abide by minimum requirements in providing social tariffs for more vulnerable customers.

The government should also reverse the cuts made to the Warm Front budget, the committee says. This was reduced by 16% from £350m in 2007-8 to £295m in 2008-9.

The committee’s report noted that other schemes such as winter fuel payments, which cost the Treasury £2bn a year, were only targeted at pensioners and not other vulnerable groups.

External information

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