Author: End Fuel Poverty Coalition

Winter fuel payment cuts set to hit 84% of disabled pensioners

Over four-fifths (84%) of older people with a long-term health condition or disability claim they will no longer get Winter Fuel Payments according to new research. [1]

The figures, reported in the Daily Express, suggest that one in five (19%*) people who have long-term health conditions or disabilities, are over 66 and say they will no longer likely get Winter Fuel Payments claim that they are worried about their own safety because of the risks of living in a cold damp home this winter. This compares with 17% of the general public and 14% of all over 65s.

The figures* also indicate that those respondents who claim they are no longer eligible for Winter Fuel Payments and have a physical disability are more likely to live in a home that is often cold and damp than the general population.

81% of older people who are already worried about cold and damp in their own homes claim they will not get Winter Fuel Payments.

While owner occupiers are most likely to no longer get Winter Fuel Payments, 77% of older people who rent will miss out, with those in social housing* especially affected by the cuts.

Commenting on the figures, a spokesperson for the End Fuel Poverty Coalition, commented:

“The data is yet another warning sign. The indications are that older people who no longer get the Winter Fuel Payment are more likely to suffer in cold damp homes this winter than the general public. 

“For those pensioners with a physical disability, the situation is potentially even worse. Many do not have access to the means tested benefits needed to claim the Winter Fuel Payment and the Government must urgently assess the impact on this group in particular and provide more support for them.

“Until the Government fully implements its plans to improve insulation and ventilation of buildings as well as stabilise energy costs, vulnerable households will continue to need financial support. 

“That’s why the Winter Fuel Payments were so important. The money provided help for older households to stay warm each winter. Sadly, now more older people are expected to live in cold damp homes this winter and this puts them at greater risk of ill health, with over quarter of a million older people becoming so ill they will be forced to the doors of the NHS.”

James Taylor, Scope’s executive director of strategy and social change, said:  

“These findings are a shocking indictment of a plan that will leave older disabled people in an impossible situation this winter.

“Life already costs more when you’re disabled. Higher electricity bills because of medical equipment to power. Higher heating bills because of health conditions affected by the cold. 

“Since the start of this crisis, we’ve heard from disabled people who are going without heating and forgoing medical treatment. Sacrifices that put their health at risk. 

“While some disabled pensioners receive pension credit, there are an alarming number who will miss out this winter. We’d urge anyone who thinks they could be eligible to apply, or to get in touch with our helpline for advice. 

“We desperately need a longer-term solution for the eye-watering energy costs many disabled people face, which is why we’re calling for the government to bring in discounted bills for disabled households.”

ENDS

[1] Winter Fuel Payment research by Opinium (undertaken 7-8 Oct 2024, sample of 2,014, weighted to be politically and nationally representative). 

Among respondents aged over 66, 88% say they do not receive a qualifying benefit and, therefore, will no longer get the Winter Fuel Payment in winter 2024/25. 2% preferred not to answer or did not know, leaving 10% saying they are on a qualifying benefit.

 2024 voting behaviour

90% of Labour voters aged over 66 claim they will no longer get the Winter Fuel Payment

89% of Conservative voters aged over 66 claim they will no longer get the Winter Fuel Payment

96% of Lib Dem voters aged over 66 claim they will no longer get the Winter Fuel Payment*

80% of Reform voters aged over 66 claim they will no longer get the Winter Fuel Payment

Region

93% of Scots aged over 66 claim they will no longer get the Winter Fuel Payment*

91% of people aged over 66 and living in southern England claim they will no longer get the Winter Fuel Payment

88% of people aged over 66 and living in London claim they will no longer get the Winter Fuel Payment*

87% of people aged over 66 and living in the English Midlands claim they will no longer get the Winter Fuel Payment

85% of people aged over 66 and living in northern England claim they will no longer get the Winter Fuel Payment

81% of people aged over 66 and living in Wales or Northern Ireland claim they will no longer get the Winter Fuel Payment*

* indicates that the base sample is below 50 and caution should be taken in using or reporting on this figure with more detailed research required to confirm the findings.

Cold damp homes cost to NHS estimated as energy price cap rises

New estimates predict that cuts to the winter fuel payment could lead to increased costs to the NHS. [1]

The analysis, first reported in the Daily Express, suggests that in 2024, the total cost to the NHS for treating pensioners in cold, damp homes may reach at least £1.5bn a year, with c.2.3m older people living in poor housing conditions.

Within these figures, an estimated 262,000 pensioners will live in cold damp homes due to the decision to axe winter fuel payments. This alone could cost the health service more than £169m a year, the research suggests.

The news comes as energy bills are set to increase for all households by 10% from 1 October.

This will leave the average household paying around 65% more for their energy than in winter 2020/21 and comes on top of years of the wider cost of living crisis, meaning households have less ability to pay these high prices. Energy debt has now hit £3.7bn according to Ofgem figures published last week.

For pensioners who previously had winter fuel payments, but now miss out, energy prices will seem higher than at any point in their lives. Those missing out on Winter Fuel Payments this year include 1.2m pensioners in absolute poverty and 1.6m disabled older people.

As personal finance experts point out, the increase in the triple lock does not replace the winter fuel payment and Uswitch.com estimate 752,000 older people will not use heating at all this winter.

Among the wider public, National Energy Action has calculated that around half of households will be rationing their energy use.

A spokesperson for the End Fuel Poverty Coalition commented:

“We’re now heading into the fourth winter of sky high energy prices, meaning the average household will have paid more than £2,500 extra for their energy than had we not been so exposed to volatile energy markets.

“For older people who previously received the winter fuel payment, but will no longer do so under the Chancellor’s new rules, the situation is even worse.

“The long term way to reduce the costs to the NHS of people living in cold damp homes is to improve insulation and ventilation of buildings as well as stabilise energy costs by getting the country away from being hooked on volatile gas prices.

“But until the Government fully implements its positive plans in these areas, vulnerable households will continue to need financial support. That’s why the Winter Fuel Payments were so important, the money provided help for older households to stay warm each winter.

“Sadly, now more older people are expected to live in cold damp homes this winter and this puts them at greater risk of ill health, meaning the costs to the NHS will soar.”

Caroline Simpson, Warm This Winter campaign spokesperson added:

“This 10 percent price cap rise is yet another blow that households can ill afford, especially when energy companies are raking in billions in profits every week.

“People want to see a transition to renewables, they want to see an end to being reliant on unscrupulous gas giants which is leading to them having to choose between eating and heating and frankly that money needs to go back in people’s pockets.

“That’s why we are pleased this government is taking great steps to end the broken energy system they inherited, but they must also help households who simply cannot afford to continue paying 65% more than they were three years ago on energy bills and look at help such as a social tariff. If they’re looking at how to fund it,  these profiteering energy companies would be a good place to start.”

Jan Shortt, general secretary of the National Pensioners Convention, said:

“The loss of the winter fuel allowance for the majority of older people clearly puts them at risk. It is a known fact that older people require warmth and a stable temperature to maintain their health.

“Living in cold, damp homes heightens the risk of strokes, heart disease, respiratory conditions and generally harms the rest of the body.

It therefore follows that the risk of overwhelming the NHS in winter is high and the cost of dealing with the consequences of the Government decision will be felt throughout the NHS and care sectors.”

Age UK charity director Caroline Abrahams added:

“We’re hearing from older people worried about how they will cope without their winter fuel payment, including many on low and modest incomes who are planning to ration their heating this winter because they’re frightened how they’ll manage this winter.

“For an older person to be forced to live in a cold home is deeply worrying because it’s very bad for their health, especially if they are living with lung or heart conditions or are very frail.

“The consequences for them could be severe and we’re sure that we’ll see more older people going to hospital this winter as a result – the last thing they or the NHS needs.

“The Government must do more at the Budget to ensure pensioners can navigate the coming cold months safely and with their health intact, or the consequences will be felt by older people and the NHS.”

Morgan Vine, head of policy and influencing at Independent Age, warned that living in a cold and damp home can have “very serious implications” for OAPs:

“Many of the older people on a low income we speak to tell us they were already cutting back on heating before the announcement to means test the winter fuel payment.

“With the reality of now losing hundreds of pounds this winter, many have shared they will be making severe cutbacks including not turning the heating on at all.

“Others have told us they will reduce the amount they eat so they can turn the heating on for a few hours a day.

“It is unacceptable that people in later life are having to make dangerous sacrifices as we approach the colder months, and we are concerned that the demand for NHS services could increase as a result.”

ENDS

[1] Estimates and calculations available online in this pdf. The research was first reported in the Daily Express on 29/30 September 2024.

Ministers unveil plans to help renters, but winter fuel payments axe stays

The Energy Secretary has announced a plan to ensure warm homes for all renters  – in both private and social rented housing – in his speech to Labour’s annual conference.

What ministers claim is the “biggest boost to home energy standards in history” follows the Deputy Prime Minister’s confirmation of a raft of measures to ensure good quality homes for all.

Under the plans, landlords will be banned from renting out properties that don’t meet stricter energy efficiency standards.

Caroline Simpson, Warm This Winter campaign spokesperson, said:

“This is very welcome news. UK properties are some of the worst insulated in Europe, with millions of Brits currently condemned to living in cold, damp, mouldy homes they can’t afford to heat. With energy bills still 65% more than they were at the start of the energy crisis, home insulation is the quickest way to bring down bills, but is seldom prioritised by landlords.

“The government must now ensure the private rented sector meets its obligations to tenants, as well as ring fencing funding for local authorities to make these promised energy efficiency upgrades a reality for those living in social housing.”

A spokesperson for the End Fuel Poverty Coalition commented:

“People in rented accommodation are almost twice as likely to live in cold damp homes compared with people who own their own properties. [1]

“The Energy Secretary is to be congratulated for recognising the importance of the need for better energy efficiency standards in rented homes, but the Government shouldn’t drag their heels with more consultations.

“This issue has been consulted on widely in the past and Ministers must move to take action. There is no time to waste as improvements will take months or years to be felt by tenants and the longer it takes, the more support households will need to stay warm in the winter.

“That’s why right now we also need to see the Government revoke cuts to the winter fuel payment for this year and commit to more support for vulnerable households so that everybody can stay warm this winter and next.”

However, in her speech, Rachel Reeves refused to back down on plans to cut Winter Fuel Payments from 1.2m pensioners in absolute poverty and for 1.6m older people with disabilities.

An End Fuel Poverty Coalition spokesperson added:

“The Chancellor doubled down on her gamble with older people’s lives to fill a budgetary black hole, which according to reports is £10bn less than was initially claimed. And that’s before the Government takes receipt of the £3bn which it is recovering from the collapse of one of the energy firms.

“While Rachael Reeves tries to claim that the triple lock on pensions is enough to replace Winter Fuel Payments, personal finance experts point out that the rise starts next April, when pensioners face an energy bills crisis now. Equally, there are up to 800,000 of the poorest pensioners who get less than the full state pension and don’t even get Pension Credit.

“And of course, the full rise only applies to the one in four pensioners who get the ‘new’ state pension.”

ENDS
[1]  Research by Opinium for Warm This Winter campaign among a representative sample of 2,000 UK adults in November 2023 found 13% of those who own outright and 12% of those who own with a mortgage live in cold damp homes. This compares with 25% of those who live in a private rented home, 23% rented from a local authority and 19% rented from a housing association.

MPs back dangerous winter fuel payments axe

MPs have approved plans to axe Winter Fuel Payments to millions of older households.

Politicians approved the measure despite recent research finding five out of every six pensioners living the below the poverty line will lose the support.

Age UK now estimate that at least 2.5m pensioners will suffer hardship as a result.

MPs who backed the cut have claimed that the Household Support Fund could pick up the slack, but this will involve local authorities removing the HSF help from other groups struggling with the cost of living.

A spokesperson for the End Fuel Poverty Coalition, commented:

“MPs have made the dangerous decision to condemn some of the most vulnerable pensioners to living in cold damp homes this winter.

“Many pensioners in poverty will now see energy bills higher than they have ever experienced in their lives.

“Parliamentarians and ministers should examine their conscience and the deluge of correspondence they have had on this issue from worried pensioners and back ways to mitigate the pain of the cut.

“We and others have given the government a number of ways they can target extra support to those pensioners most in need. One clear solution would be to extend eligibility to those on other forms of benefit and making more support available to vulnerable pensioners.

“But the Treasury could also look at a more comprehensive system of support for all of those living in cold damp homes, such as an emergency energy tariff or reform and expansion of the Cold Weather Payment system.”

Caroline Simpson, spokesperson for the Warm This Winter campaign commented

“The government needs to commit to keeping everybody warm this winter. Many people back some form of means testing for the Winter Fuel Payment, but scrapping it for all at short notice carries a very real risk of putting millions of vulnerable pensioners in harm’s way.

“While we back the government’s plans to prioritise home insulation which is the long term way to bring down everyone’s bills for good, no one should be forced to live in a cold damp home this winter.”

Caroline Abrahams CBE, Charity Director at Age UK added:

“We’re deeply disappointed, but not surprised, that the vote to brutally means-test Winter Fuel Payment was passed today. As soon as the Government announced it was instructing its MPs to support it this was the inevitable result, but we would like to thank all those in every party who voted against the policy or abstained.

“There’s been a lot of discussion about the Government’s decision, but at heart Age UK’s critique of their policy is really simple: we just don’t think it’s fair to remove the payment from the 2.5 million pensioners on low incomes who badly need it, and to do it so quickly this winter, at the same time as energy bills are rising by 10%.

“It is crystal clear that there is insufficient time to make any serious impact on the miserably low take-up of Pension Credit before the cold sets in this autumn, and the Government has brought forward no effective measures to support all those whose tiny occupational pensions take them just above the line to claim. It’s true they have agreed to extend the Household Support Fund until April and they deserve some credit for that, but the HSF is an all-age fund that you have to apply for, so we know it will only help a small proportion of all the pensioners who will be in need as a result of their policy change.

“The Government has also tried to suggest that the increase in State Pension for older people next year as a result of the Triple Lock means there’s no need to worry about how they will cope now, but that won’t help anyone this winter and most pensioners will not benefit to the extent being suggested – either because they are on the old State Pension which attracts less of an increase, or because they don’t qualify for a full State Pension in the first place.

“The reality is that driving through this policy as the Government is doing will make millions of poor pensioners poorer still and we are baffled as to why some Ministers are asserting that this is the right thing to do. We and many others are certain that it is not, and that’s why we will continue to stand with the pensioners who can’t afford to lose their payment and campaign for them to be given more Government support.

“Meanwhile, winter is coming and we fear it will be a deeply challenging one for millions of older people who have previously relied on their Winter Fuel Payment to help pay their energy bills and who have no obvious alternative source of funds on which to draw. As a charity we will do everything we can to help them, but with so many in need and no extra support on offer from the Government at the moment it’s looking like an incredibly uphill task.”

Energy giants see £457 billion profits as consumers’ bills rise

Just 20 energy companies have made a staggering £457 billion in profits since the start of the energy bills crisis. [1]

As of the end of August, following 2024 interim results, profits have amounted to over £457 billion since just before the energy crisis started. £61 billion has been posted in profits this year alone.

The staggering sums are revealed in the End Fuel Poverty Coalition’s updated profit tracker which examines profits made by a sample of companies that include energy producers (such as Equinor and Shell) through to the firms that control our energy grid (such as National Grid, UK Power Networks and National Gas Transmission) as well as suppliers (such as British Gas). It does not include supply chains or market trading firms.

Ofgem’s most recent Price Cap announcement indicated that energy bills will rise 10% from 1 October.

As part of this rise, the regulator indicated that suppliers will be able to make an additional 11% in profits on every standard variable tariff. Analysis of these figures suggest that supplier profits allowed through the Price Cap could amount to c.£1.2 billion over the next 12 months, enough to cover the cost of Winter Fuel Payments for almost all pensioners. [2]

Warm This Winter spokesperson Caroline Simpson said: 

“There are clearly an obscene level of profits being made and now energy suppliers have been given the green light to make a further £1.2 billion which is enough to cover the Winter Fuel Payment allowance for all pensioners.

“That’s why the government is right to take suppliers to task and ask them how they plan to help customers of all ages get through the winter ahead.

“We agree with the Government that we need to invest in homegrown renewable energy and an extensive programme of insulation to end this vicious cycle of bill shocks and reliance on volatile fossil fuels.”

A March 2024 Warm This Winter Tariff Watch report also called for improvements in transparency of the ownership of these firms after it found that British households had been boosting the profits of Chinese and Qatari Government-backed funds as the cost of the gas network has surged 38%.

A spokesperson for the End Fuel Poverty Coalition added: 

“As we’ve said all along, there is plenty of money in the energy system, but it never ends up in the hands of consumers who are struggling to pay their energy bills.

“Millions are now in energy debt, pensioners have had their Winter Fuel Payments taken away and yet shareholders are seeing returns running to the billions of pounds every year.

“The Government must step in to end this unfairness, bring about an end to energy debt, an extension of Warm Home Discounts and restore Winter Fuel Payments to more pensioners.”

The Warm This Winter campaign is urging the public to  join more than 4,500 people in writing to their MP or signing the 38 Degrees or Age UK petitions.

ENDS 

[1] The updated tracker is available online at https://www.endfuelpoverty.org.uk/news/energy-firm-profits-tracker/ 

[2] Ofgem Price Cap decision, p4 https://www.ofgem.gov.uk/sites/default/files/2024-08/Summary_of_Changes_to_Energy_Price_Cap_1_October_to_31_December_2024.pdf. EBIT allowance from 1 October 2024 is £44 per standard variable tariff customer per year. Ofgem state that 27m customers are on a standard variable tariff. £44 * 27m = £1.19bn.

Winter Fuel Payment backlash enters fourth week

The campaign against the Chancellor’s decision to axe Winter Fuel Payments from millions of older people has continued into a fourth week.

In a speech to the media in Downing Street, the Prime Minister attempted to justify the impact of the decision after a report from Age UKfound that nearly 2 million pensioners could face poverty this winter.

The Prime Minister hit out at “rot” in the system which had harmed the nation’s finances, that the Payments were “not a particularly well designed scheme” and that “support” will be there for the pensioners who need it the most. The PM hinted that those in society with the “broadest shoulders” could expect to see tax rises in the Budget.

However, analysis has found that some older people will face 131% year-on-year bill increases and the Pension Credit system has been hit with delays in processing applications.

Over 400,000 people have signed a Age UK petition with 300,000 signing a 38 Degrees petition and over 4,500 members of the public have shared their concerns with MPs via the Warm This Winter campaign.

A spokesperson for the End Fuel Poverty Coalition, commented:
“Axing Winter Fuel Payments is not about rot in the system, it is about basic fairness for older people facing soaring energy bills.

“In real terms, the changes this winter mean that some older people will face the highest energy bills on record.

“This has the potential to create a public health emergency which will actually create more pressure on the under-pressure NHS which the Prime Minister says he wants to fix.

“The impact of living in cold damp homes is particularly harsh on those older people with a disability, a long term health condition or with poor mental health. It results in people turning to an NHS and, in some cases, can result in additional winter deaths.

“Ending energy debt, extending the Household Support Fund, expanding Warm Home Discounts and evolving standing charges are all now needed urgently to help mitigate the impact of high bills and the axe to the Winter Fuel Payment.

“But as well as support this winter, the public need to see a clear timetable for when the very real benefits of cheaper renewable energy and the Warm Homes Plan will kick in.

“If the Prime Minister needs to find some ‘broad shoulders’ to pay for this support, let’s not forget that every month we hear about more massive profits for firms in the wider energy industry.”

Jonathan Bean from Fuel Poverty Action, added:

“Reeves’ reckless decision has robbed pensioners of their winter heating lifeline, just as prices rise again. Urgent action is needed by the Government and Ofgem on inflated energy prices, high standing charges and obscene profits.”

Energy bills up as some pensioners face worst prices on record

The average household energy bill is to increase by £149 from 1 October after Ofgem said it was hiking its price cap by 10% from the current £1,568 for a typical household in England, Scotland and Wales to £1,717.

Meanwhile, analysis by the End Fuel Poverty Coalition has found that in real terms, the changes this winter mean that some older people will face the highest energy bills on record.

A spokesperson for the End Fuel Poverty Coalition, commented:

“With energy bills for the winter ahead now confirmed as being 65% above where they were before the crisis, the Government needs to come up with a plan to prevent even more households entering fuel poverty this winter.

“Ending energy debt, extending the Household Support Fund, expanding Warm Home Discounts and evolving standing charges would all help mitigate the impact of high bills and the axe to the Winter Fuel Payment.

“But as well as support this winter, the public need to see a clear timetable for when the very real benefits of cheaper renewable energy and the Warm Homes Plan will kick in.

“To add insult to injury, in the detail of today’s Ofgem announcement is the fact that the profit margins energy suppliers are allowed to make will increase by 11% [pdf, page 4].

“Add to this that every month we hear about more massive profits for firms in the wider energy industry. It’s time to tax these firms fairly – not just the fossil fuel producers – and use the money to keep people warm now and in the long term.”

Warm This Winter spokesperson Fiona Waters said:

“This price hike is yet another blow to the millions in fuel poverty who, like every other bill payer in the UK, are still forking out 65 percent more than they did for their energy than at the start of the crisis.

“Meanwhile energy companies have been profiteering, making more than £470 billion since 2020. That shows there is money in the system but that is going to energy bosses and their shareholders, when it needs to go to ordinary people.

“Today just highlights the Government’s policies on renewables and energy efficiency are needed to mend this broken system but we also need help now to get everyone of all ages through the winter ahead.”

Richard Kramer, Chief Executive of the national disability charity Sense, said:

“This increase in the energy price cap will be very alarming for many disabled households, who face unavoidable extra energy use for essential equipment such as powered chairs and feeding machines. This is a stark reminder that the cost-of-living crisis is far from over, and disabled households still need extra support.

“We would like the government to implement a social energy tariff, which would help level the playing field for disabled people who rely on energy-intensive equipment. Disabled people cannot be left waiting any longer for targeted help with their energy bills.”

More reaction to follow

Government winter fuel payment plans hit by chaos

Hundreds of thousands of pensioners could miss out on getting Winter Fuel Payments before cold weather hits.

Almost 900,000 pensioners need to apply for the Pension Credit if they want the payments designed to keep them warm this winter, but the official helpline claims that they may not have their application processed in time.

A recorded message on the Pensions Credit helpline says applications could take nine weeks to process, but the “qualifying period” for the Winter Fuel Payment is 16 September, in just over 3 weeks. [1]

Ministers have admitted that pensioners can still apply for the Winter Fuel Payments after the qualifying period has closed, as long as they apply for Pensions Credit before 21 December and would have been eligible in the qualifying period (16-22 September).

Assuming a pensioner meets the Pensions Credit criteria, the DWP advise that any eligible claimants whose Winter Fuel Payment does not come through automatically will have to claim for that by 31 March 2025.

However, campaigners have highlighted that backdating payments means extra bureaucracy and that the money may not reach vulnerable pensioners until after the first cold spell of the winter has hit.

A spokesperson for the End Fuel Poverty Coalition, commented:

“It’s clear Ministers have not thought this through. 

“When the Chancellor cruelly snatched away the winter fuel payment from millions of pensioners, she promised to help households who are eligible to claim the benefit.

“But as it takes so long to process new claims, even those applying now may be forced into a back-dating procedure which could delay payments.

“While we support ministers’ drive for longer term reduction in energy bills through renewables and a Warm Homes Plan, households need help this winter.

“The Government must broaden the targeting of the Winter Fuel Payment, to introduce support to end energy debt, expand the Warm Home Discount and extend the Household Support Fund.”

In a poll by YouGov for the Energy and Climate Intelligence Unit (ECIU), two thirds of people (67%) were aware of the move to remove winter fuel allowance payments from pensioners, apart from those who receive means-tested benefits. The pollsters found that 59% opposed it, with only 28% in favour.

Jonathan Bean from Fuel Poverty Action, said:

“The Winter Fuel Payment axe has been wielded at short notice and with no consultation. And now the whole process is mired in confusion.

“Left caught up in the chaos are older people who will be left fearful of the winter ahead. Many will be unsure if they will get the Winter Fuel Payment or not and delays to payments will only add to the misery.

“If ministers think that a communications campaign to encourage take up of Pensions Credit is any substitute for actual help with energy bills this winter, then they are very much mistaken.

“The Government needs to face up to the fact that this policy is unpopular and dangerous and change track.”

Meanwhile, Citizens Advice research found that a quarter of the UK population believe they could be forced to turn off their heating and hot water this winter due to an expected rise in household energy bills from October. The figure rises to 39% of bill payers on a low income.

Jan Shortt, General Secretary of the National Pensioners’ Convention added: 

“Choosing pensioners as an easy option to cut support from is set to condemn hundreds of thousands of older, and vulnerable people to a grim and potentially life threatening winter ahead.”

ENDS
[1] Call to 0800991234 made 12:25 21 August 2024

Ministers urged to review nine nightmare energy rules

Ministers should send a clear signal that they are on the side of consumers by reviewing nine sets of rules, according to campaigners.

As households count down to the next Ofgem price cap announcement on Friday (23 August), an analysis of recommendations from previous Warm This Winter Tariff Watch Reports [pdf] has identified ways regulators could cut bills.

While six recommendations from a series of Warm This Winter Tariff Watch Reports published during 2023 and 2024 have been implemented by Ofgem, a further nine proposals have not been acted on.

Chief among them are recommendations to bring down standing charges, cap exit fees and improve governance of the energy industry. [1]

The standing charge reforms could see a reduction in these annual charges on households by £152.06 (46% from £334.08 a year to £183.02).

Delivering these changes would require changes to Ofgem regulations and Government funding as well as action taken to protect low income and high usage households, such as those who rely on energy for medical needs.

This could include the introduction of a social tariff, which is backed by well over half the population according to recent polling by Opinium, and could be paid for through contributions from energy industry profits (producers, networks and suppliers).

Meanwhile, the loose regulation on exit fees has left bill payers at risk of being stuck on expensive fixed rate energy tariffs or with poor customer service as the cost of leaving a fixed tariff early would leave the household out of pocket.

Exit fees on energy bills have increased by 345% in the last three years. Around three million UK households have opted for fixed energy tariffs and the latest Warm This Winter Tariff Watch report shows that the majority have exit fees of more than £100. A snapshot taken in April 2024 found that 76% of fixed tariffs have annual costs above the Ofgem price cap.

Other rules which have been highlighted in Tariff Watch reports include a lack of transparency in energy firm ownership which has seen British households boost the profits of Chinese and Qatari Government-backed funds as the cost of the gas network has surged 38%.

Questions were also raised about the profits being made by energy firms due to an underinvestment in electricity infrastructure and 14 obscure charges to households’ electric bills. 

Simon Francis, coordinator of the End Fuel Poverty Coalition, commented:

“These suggestions must be part of a road map to bring down energy bills, improve transparency in the industry and reset Britain’s broken energy system so it is on the side of consumers.

“While these changes to regulation won’t be enough to resolve all the problems we see, it would signal a welcome change in direction.

“We know the Government has the ambition to bring down bills in the long term, but it also needs to look at shorter term measures too.

“Ministers can earn the public’s trust by protecting vulnerable households, reducing energy debt, bringing in changes to energy meters, ramping up insulation programmes, reforming standing charges and ending energy industry profiteering.”

Fiona Waters, spokesperson for the Warm This Winter campaign which commissioned the reports, said:

“The new government has inherited a nightmare set of rules that are clear hurdles to creating the fairer energy system that the public are crying out for. 

“With energy bills forecast to increase again in October, this problem is only going to get worse if new ministers do not step in now. Now is the time to bring back fairness with urgent action to support struggling households through the next winter and a commitment to end profiteering by properly taxing the wider energy industry.”

Dylan Johnson, from Future Energy Associates which compiled the reports, added:

“More can and should be done by the energy regulators. 

“Overall, Ofgem must become more proactive in identifying problems with our energy system and more efficient in enacting the necessary changes to protect the most vulnerable in our society. 

“For now, Ofgem must implement immediately actionable solutions and not shy away from making the key long-term decisions that can achieve a fairer, greener energy system.”

ENDS

Recommendations Addressed by Ofgem / Government (edition of Tariff Watch):
  • Convergence of PPM and Direct Debit Prices (TW1): Ofgem implemented a levelling charge, balancing the standing charges between PPM and Direct Debit customers.
  • Review of Wholesale Energy Allowances (TW1): Ofgem conducted a thorough review and concluded no systematic differences in costs.
  • Reduction on EBIT Allowance (TW1): Ofgem revised the EBIT allowance to include both fixed and variable components.
  • Market Stabilisation Charge (MSC) Removal (TW1): The MSC expired on March 31, 2024.
  • Consumer Standards Consultation (TW2): Ofgem announced reforms to improve customer service, effective December 2023.
  • New Prepayment Meter Rules (TW2): Ofgem set conditions for PPM installations, effective November 8, 2023, although these did not go far enough in addressing the concerns of all campaigners.
Recommendations Not Addressed by Ofgem / Government:
  • Transparency in Cost Calculations (TW3a, TW3b): Ofgem has not improved the transparency or provided detailed breakdowns and machine-readable data formats for DNO and gas network costs.
  • Clearer Explanations for Shifting DUoS and TNUoS Costs (TW3a): Ofgem has initiated a review but has not provided clear explanations or justified the cost shifts.
  • Addressing Chronic Underspending by DNOs (TW3a): It remains unclear what specific actions Ofgem is taking to ensure adequate investment by DNOs.
  • Dynamic Approach to Line Losses Calculation (TW3a): Ofgem has not implemented a dynamic framework for line losses.
  • Management of Gas Network Decommissioning Costs (TW3b): Ofgem has acknowledged the issue but has not detailed specific steps to manage decommissioning costs.
  • Ownership and Ethical Considerations (TW3b): Ofgem has not outlined specific actions to scrutinise and align gas network ownership with national security and ethical standards.
  • Cap on Exit Fees (TW4): Ofgem has not implemented measures to cap exit fees or improve their transparency.
  • Shift Costs from Standing Charges to Unit Rates (Standing Charge Report): Ofgem has closed their call for input on standing charges, but no further steps have been taken to move adjustment allowances, headroom allowances, profit allowances, payment uplift, and levelling costs entirely to the unit rate section of the bill.
  • Shift Policy Costs from Standing Charges to General Taxation (Standing Charge Report): While the Labour Party has indicated a willingness to broadly address standing charges in their manifesto, no concrete steps have been taken yet to move policy costs from standing charges to general taxation.

The full report is available to download. Previous Tariff Watch reports can be downloaded from the reports and correspondence section of the EFPC website.

Councils warn on Household Support Fund while Scottish fuel payments axed

More than four out of five councils in England expect demand for welfare support to increase over the winter, according to the Local Government Association.

However the Household Support Fund, which is the main route for councils to provide assistance, will close in September as central government funding will run out. This has left six in 10 local councils saying they will be unable to provide extra welfare support.

The Household Support Fund was introduced by the previous government in 2021 aimed at helping people struggling to buy food, pay bills and cover other essentials.

A spokesperson for the End Fuel Poverty Coalition, commented:

“The Household Support Fund is one of the last lines of defence against poverty for hard-pressed families and vulnerable people.

“We have publicly commended the Government in taking some of the long term measures to tackle high energy bills, such as the drive for more renewable energy and a Warm Homes Plan. But these solutions will take time to bring down bills.

“In the meantime, households of all ages will need more support from the Government to stay warm this winter, not less.

“As well as extending the Household Support Fund, we urge the Chancellor to rapidly consult with consumer groups to reverse planned changes to Winter Fuel Payments, to introduce support to end energy debt and expand the Warm Homes Discount.”

The Scottish Government has also now outlined how the UK Chancellor’s cuts to winter fuel payments will affect pensioners in Scotland.

Plans to means-test Winter Fuel Payment in England and Wales will see the Scottish Government’s funding for the scheme cut by up to £160 million.

The Winter Fuel Payment UK benefit was due to be replaced by a Scottish alternative – but ministers have confirmed it will be means tested, while the roll out has been delayed.

Age Scotland said the government in Edinburgh has been left with no decision but to replicate plans to means-test the Winter Fuel Payment.

Frazer Scott, chief executive of Energy Action Scotland, commented:

“The UK Government has left little choice for the Scottish Government but to remove this vital support from hundreds of thousands of older households.

“It is a real body blow for pension age households struggling to pay for unaffordable energy.

“Confirmation of the loss of this income for budget conscious older households will undoubtedly put additional pressure on health and advice services putting health at risk. This is not a fairer system, it widens inequalities.

“Deeper and more targeted support is need to ensure that older people can stay warm this winter and help them avoid unrepayable debt. A reformed support not a wholesale removal from many who are just above the level of means tested benefits.”

The End Fuel Poverty Coalition spokesperson added:

“This is a decision essentially made in Westminster by the Chancellor, but it is pensioners in Scotland and across the rest of the UK that will pay the price.”