Warning over growing fuel poverty

A report published by the National Housing Federation shows that by the end of 2009 5.7 million UK households will be spending at least 10% of their annual income on energy bills - an increase of 100% since 2005.

The research, entitled Energy Prices and Debt, written by IPA Energy and Water Economics, says around 5.7 million people will be in fuel poverty by 2009, compared with around 3.8 million in 2007 and 2.4 million in 2005. It says annual electricity bills are expected to increase to over £500 each year and gas bills to around £900 by 2010.

The report also suggests people from low income backgrounds will be the worse hit by the energy price increases due to prepayment schemes. The five million people who pay for their energy through prepayment schemes incur higher tariffs and by 2010 will be paying £65 more than people billed quarterly, according to the report.

Ruth Davison, federation director of campaigns and neighbourhoods, called the findings part of a "full scale national energy crisis". She said: "The Government needs to grasp the nettle and take strong and radical action to protect the nation's energy customers. Britain is virtually unique in Europe in that our energy suppliers have been privatised and deregulated.

"The promise at the time of deregulation was that prices would fall. This has palpably not happened. So, it is now time for ministers to regulate the market.

"Energy companies must be regulated so that they can no longer charge prepayment meter customers grotesquely high tariffs, a cap must be put on the prices they charge, and they must be made to use their profits to pay for their social and energy efficiency responsibilities rather than piling these costs on the already crippled consumer".

The research coincides with calls from charities and consumer bodies for the Government to follow a new ten-point Fuel Poverty Charter. The charter, supported by Friends of the Earth, Association for Conservation of Energy and National Energy Action, amongst others, urges the Government to properly insulate UK homes and instal renewable energy systems as well as providing short-term crisis payments to low earners.

Set out in 10 points, it asks the Government to supply a "fully-costed Fuel Poverty Plan" declaring its intentions, make fuel poverty a Public Service Agreement so the Government has legal duties to address it, as well as supplying homes with "super energy efficiency, low carbon and renewable energy systems".

It also calls for crisis payments to be made to the "fuel poor", especially in the winter, and for the Government to ensure those entitled to benefits are claiming them.