Up to 100,000 households could be helped with their fuel bills under a deal agreed between the UK’s big six energy companies and the government. The energy firms have agreed to boost their collective annual spending on social assistance programmes by £225m over the next three years. Spending will go up from £50m in the past financial year to £100m this year, £125m in 2009-10 and £150m in 2010-11. The deal was brokered by Energy Secretary John Hutton. if all the extra money was used to offset bills it could remove up to 100,000 homes from fuel poverty, although fewer would benefit if it was spent on more permanent energy efficiency measures. I do not underestimate the difficulties and anxiety that rising energy prices can cause. But consumer group Energywatch recently said social tariffs reached only one in 15 of the most vulnerable households. A home is judged to be in fuel poverty if 10% or more of the household income is spent on energy bills. The big six energy firms are British Gas, E.On, Scottish Power, Scottish & Southern, EDF, and NPower. “I do not underestimate the difficulties and anxiety that rising energy prices can cause but I believe that this extra cash, coupled with ensuring we have the most competitive market possible, will help us toward our goal of eradicating fuel poverty in the UK,” said Mr Hutton. The extra assistance will be targeted at households on low incomes which are most vulnerable to fuel poverty, including the elderly. In 2008-9, the government is increasing winter fuel payments to £250 for over-60s, and to £400 for over-80s. Earlier this week, two charities said they were taking legal action against the government for not doing enough to help people hit by rising fuel prices. Friends of the Earth and Help the Aged are bringing the joint legal challenge to end “the misery of fuel poverty”. All six big energy suppliers have announced significant price rises since the start of the year. This move is very helpful but won’t, on its own, end fuel poverty. Peter Lehmann, former chairman of the Fuel Poverty Advisory Group. Scottish and Southern Energy was the last to make the move with an average 14.2% increase in electricity bills, and a 15.8% lift in gas charges for domestic customers on 1 April. In early January, Npower put prices up for its electricity customers by 12.7%, while its gas price rose by 17.2%. EDF put up electricity tariffs by 7.9% and gas prices by 12.9%. British Gas increased gas and electricity prices by 15%. Scottish Power increased gas bills by 15% and electricity bills by 14%, and E.On put up gas bills by 15% and electricity tariffs by 9.7%.

Chancellor Alistair Darling announced an aim to encourage the energy companies to increase social tariffs to £150m a year in the Budget. The deal with the energy companies runs up to 2011, but the government expects the assistance to continue at the level of at least £150m a year. “This move is very helpful but won’t, on its own, end fuel poverty,” said Peter Lehmann, former chairman of the Fuel Poverty Advisory Group, which has called on the government to better target money to help vulnerable households. Ann Robinson, director of consumer policy at price comparison website USwitch.com, said the extra help was dwarfed by rising bills. “This is welcome but falls well short of the 500,000 additional households plunged into fuel poverty by the 15% increase to household energy bills this year.”

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