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The government funded Fuel Advisory Group has announced that around 300,000 more UK homes could find themselves in fuel poverty before the end of the year. This would mean that nine million people could fit the category by 2016 if these figures continue. In response, consumer groups are asking the government to use part of the carbon tax income to help lower income families.

Rising energy costs

Fuel poverty is defined as being where a household is spending more than 10% of its income on heating; a problem which is being exacerbated by rising energy costs of more than 7% already this year. The Fuel Advisory Group which advises the Department of Energy has said that one solution could be a new duty for local authorities for them to tackle fuel poverty. In addition welfare reforms needed to be looked into.

Derek Lickorish from the group has said that welfare cuts, a cold winter and rising energy costs in combination with austerity measures are meaning that the plight of the fuel poor is more serious than ever. He describes it as a toxic cocktail of circumstances. In addition, one third of those homes in fuel poverty contain people with a disability or illness and one fifth contain a child under the age of five. Ten percent of these homes house a person over the age of 75.

Carbon tax

Meanwhile consumer groups are suggesting that the taxes gained from the new carbon tax could be used to fund further programs to tackle fuel poverty. It is thought that using these funds in this way could eradicate fuel poverty completely.

This news comes as energy providers have been told by Ofgem to improve their service by offering simplified tariffs and ensuring that all customers are on the best tariff for their needs. Ed Davey will also be attending an energy summit with energy companies to discuss these issues further.

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