Bills, rather than children and pensioners, should be frozen, writes Dick Skellington.
It has not been a good autumn for energy companies, nor the Government whose only solution to the soaring cost of domestic heating seems to be to try and get customers to switch suppliers in a market place where the differences between tariffs is minimal and where penalties are imposed for doing so. A cartel dominates energy supply.
Amid reports that Danny Alexander, Chief Secretary to the Treasury, was rather perturbed by smaller energy companies using tax loopholes, could be heard plaintiff cries from the Big Six energy companies that their profits were not large enough to justify a windfall tax.
Meanwhile, the average household bill is set to soar above £1,400 a year as the Big Six impose another fivefold inflation tax increase on households, many of whom are elderly. Elderly customers have just had their tailored tariffs stopped. It is no comfort for those sitting at home without their heating on to read this week that one Big Six chief said he might forgo his £3.5 million bonuses this year. The head of Centrica, Sam Laidlaw, also promised to donate part of his remuneration to charity. Maybe he is beginning to feel guilty, or is the company trying, like the boss of Ryanair, to redeem a tarnished image? Astonishing that, £3.5 million in bonuses – a year! While Mrs Smith freezes to death in Peckham.
In this environment Labour's promise of a price freeze seems attractive, but it needs this Government in its autumn statement to deliver something to help those surviving in fuel poverty. At the moment it looks most unlikely that George Osborne will deliver an autumn statement that will announce emergency help for fuel poverty sufferers. Instead, so far what we have got is rather nanny state advice on how to heat our homes – oh, and if you are eligible, go and get a flu jab.
A survey last October for Age UK revealed that 28 per cent of pensioners reported their main concern for the coming cold months was how they could keep warm. Being cold, even for a short period of time, can be dangerous, and can lead to hospitalisation (itself expensive), and worse, death.
The latest figures available for the winter of 2011-12, showed that there were 19,500 excess deaths in the over-75 age group. Each year, around 20,000 more people aged 65 or over in England and Wales die in the winter months than in other months. In some years (e.g. 2008/09), the figure is much higher. In the past ten years the heating allowances Government gives to the elderly have fallen behind the annual prices hikes of the Big Six. Winter payments are worth far less now than they were in 2006.
If you track the price hikes in the last decade, you discover that the amount that households spend on gas and electricity has soared by over three-quarters! According to the Office of National Statistics (ONS) heating and lighting now represent 3.1 per cent of average household spending compared with 1.8 per cent a decade ago. The proportion of income spent by pensioners on heating and lighting is far greater than the national average.
Older people occupy much of the substandard housing in Britain, and the link between ill health and housing is strong. This is particularly important because many older people spend such a lot of time at home. Respiratory diseases are often caused or made worse by damp and cold conditions at home. Inefficient heating and insulation are factors driving the high level of winter deaths in Britain: there are 30,000-40,000 more deaths in winter than summer months, and old people make up the vast majority of that excess.
Age UK predict that over three million elderly people will not be able to afford to stay warm this winter, following the across-the-board 8-10 per cent price hikes announced at the end of summer. MPs are expressing increased disquiet. Simon Hughes, Liberal Democrat's Deputy Leader, called on the Chancellor to give the poorest households an energy rebate.
But the focus on elderly deprivation has tended to distract from the growing number of families with children who are falling victim to fuel poverty. Some evidence comes from a Barnardo’s survey in which over 90 per cent of their staff said they worked with families in fuel debt. To pay their energy bills, many families cut back on essentials such as heating and food.
Studies show that long-term exposure to a cold home can affect weight gain in babies and young children, increase hospital admission rates for children and increase the severity and frequency of asthmatic symptoms. Children in cold homes are more than twice as likely to suffer from breathing problems, and those in damp and mouldy homes are up to three times more likely to suffer from coughing, wheezing and respiratory illness, compared to those with warm, dry homes.
The companies argue that their costs have risen hugely because of wholesale power price increases and "green" levies. Don't take this at face value: companies buy a portfolio of future contracts lasting many years to ensure that their wholesale supplies will meet future retail demand. If they have underestimated their needs, that is their responsibility – and they could choose to absorb that cost. No one knows how much the power companies have bought in advance – and at what price – so independent experts have to take their arguments on trust.
If you want to calculate if you are living in fuel poverty Acting on Fuel Poverty have produced a useful online tool. A person is living in fuel poverty if, to heat their home to a satisfactory standard, they would need to spend more than 10% of their household income on fuel.
Readers living in Scotland can at least draw some comfort from the Scottish Government's intention of removing people from fuel poverty by 2016. In October 2011, 684,000 Scottish households (28.9 per cent) were in fuel poverty in October 2011. No such commitment is promised for England and Wales.
The heat is clearly on Government and the Big Six to respond with policies and prices which will help people struggling to keep their homes warm this winter. Don't hold your breath.
Dick Skellington 6 November 2013
The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.
Cartoon by Gary Edwards