What is fuel poverty?

Fuel poverty is a relatively new term in the UK, but one that is receiving increasing interest, as gas and electricity bills continue to soar, and are due to keep rising over the next year.

The definition of fuel poverty is generally held to be when a household finds it must spend in excess of 10% of its income in order to sufficiently/adequately heat the home. However, fuel poverty isn't simply about being able to afford heating - it also includes spending on things like energy for cooking, running televisions and keeping lights switched on, having hot showers and doing the washing for example.

Generally fuel poverty is said to occur when several factors are linked together - a low income, high and rising fuel prices, a low-efficiency home (eg: no double glazing, no loft insulation, old boiler etc) and the rise in single or low occupancy properties (so, costing as much to heat a house for one person, as it would be for several.)

Fuel poverty is as worrying and stressful as any other type of debt, particularly if a person falls into arrears. The energy companies may still chase outstanding bills using legal processes, if they aren't paid, and you don't make an agreement with them.

However, there are solutions to mitigating - or avoiding the problem. For example, the government has recently woken up to the rising problem of fuel poverty and has launched schemes to tackle it. For example, there are specific benefits for paying energy bills for people on low incomes, and schemes such as the WarmFront Programme and the Winter Fuel Payment scheme which gives extra assistance to elderly on low incomes.

Increasingly, energy companies are also being forced into helping their elderly or vulnerable customers with grants or assistance to pay their bills. One particular problem in the past was that customers on low incomes were forced to pay for their energy on pre-pay meters, rather than regular direct debits. Meters tended to be the more expensive option, and these customers - often vulnerable and on lower incomes - then missed out on valuable discounts. Effort is now being made to rectify these situations and offer extra protection to these struggling people.

The government has also recently offered a subsidised scheme for helping to make houses more energy efficient - for example by offering grants (for either half or the entire cost) of domestic efficiency work such as cavity wall insulation, double glazing, loft insulation and energy efficient boilers rated ideally at 'A'. Together these measures can significantly reduce household energy bills, although the problem for the average struggling family not entitled to full benefits, is the difficulty in finding sufficient funds to pay for this work in the first place!

There are also ways to save money if you aren't eligible for a grant or benefit payment however. For example, become more energy conscious and try to switch things off when not in use. Or shop around for the best energy tariff. There are a number of websites which will prompt you for some basic details, such as your estimated consumption, house type etc- and suggest your cheapest supplier, and anticipated savings. Some believe this is worth doing yearly.