2.5m households facing fuel poverty

The Fuel Poverty Advisory Group (FPAG) says investment of £1 billion per year is needed to hit Government targets of wiping out fuel poverty by 2016.

A growing difference between prices paid by pre-payment customers compared to those on direct debit is a "particularly worrying" trend, its report says. That gap hit a high of £120 last year - up from £70 in 2005.

Households are said to be in fuel poverty if more than 10% of their income is spent on gas and electricity.

The Government has set a target of eradicating fuel poverty in all households by 2016.

That target is "challenging but attainable", according to the FPAG report. But it warns that a second Government target of wiping out fuel poverty amongst vulnerable households by 2010 remains "very difficult".

The FPAG is a group of external experts who advise the Government on ways of wiping out fuel poverty in England.

Its chairman Peter Lehmann called for domestic prices to be reduced in line with large wholesale price reductions. And he criticised the widening gap between prices paid by pre-payment versus direct debit customers.

Commenting on the report's findings, Help the Aged head of public affairs Mervyn Kohler said: "A doubling of the number of people living in fuel poverty in just three years should be greeted with dismay by all those in Government who must now seriously step up efforts to reduce these shameful figures. Worryingly, half of all households in fuel poverty are pensioner households."

He called on the Government to make fuel more affordable to vulnerable households and step up schemes to improve household energy efficiency.