Written Ministerial Statement- Fuel Poverty

Minister for Social Justice, Jane Hutt

Today, official figures are published which show almost 200,000 households in Wales – 14% – were living in fuel poverty in October 2021. A further 153,000 households were at risk of fuel poverty.

These figures are stark and worrying; they show the depth of the energy crisis before the winter started and before OFGEM raised the domestic energy cap by 54% in April.

Sadly, we know the worst is yet to come. We are in the midst of an unprecedented cost-of-living crisis, which is being driven by runaway energy prices. The war in Ukraine has deepened this crisis.

The introduction of the new energy price cap at the start of the month risks plunging tens of thousands more people into energy insecurity and fuel poverty.

On top of soaring energy prices, households must also pay increased standing charges on their domestic energy bills and people in Wales are among the hardest hit. The highest increases in the UK are in North Wales, with standing charges increasing by 102%. These additional costs have a disproportionately negative effect on lower income households and those on pre-payment meters.

We hear terrible accounts daily about people and families who are afraid to turn their heating on and from families who face the awful choice between heating and eating.

If we use the 2021 modelled estimates of fuel poverty, which are published today, and revise them to take account of fuel prices – electricity, mains gas and heating oil – from 1 April 2022, and assuming all households are on the new price cap, we can estimate:

• Up to 45% (614,000) of all households could be in fuel poverty following the price cap increase in April 2022
• Up to 8% (115,000) of all households could be in severe fuel poverty
• Up to 15% (201,000) of all households could be at risk of falling into fuel poverty.

Although these are just estimates, these figures underline, once again, the need for urgent action from the UK Government to alleviate the financial pain and worry being experienced by families and households all over Wales.

The action offered to date – the £200 rebate on electricity bills, which must be repaid by every bill payer over five years – is too little. The Spring Statement was an opportunity for the UK Government to protect the most vulnerable in our society, instead it was an ideological, regressive statement from the Chancellor, which lacked practical measures to help those who need help the most – there is nothing for those who cannot work and those on lower incomes.

We today repeat our calls for the UK Government to take concerted and targeted action to ease the cost-of-living crisis by:

• Paying the £200 electricity bill rebate as a non-repayable grant to all bill payers.
• Introducing a lower energy price cap for lower income households so they are better able to meet the costs of their energy.
• Increasing the rebate paid through the warm homes discount and winter fuel schemes.
• Removing all the social and environmental policy costs from household energy bills and instead meeting them from general taxation, at least part-funded by a windfall tax on the excess profits being made by gas and oil producers. 
• Reinstating the £20-a-week uplift to Universal Credit.

We will continue to do all we can to help people through this unprecedented cost-of-living crisis. Since November, we have invested more than £380m in a package of targeted support for people. This includes the first round of the Winter Fuel Support Scheme – a £200 payment for eligible low income households. This will be extended in winter 2022-23 to reach more households.

People are also starting to receive their £150 cost-of-living payment – this is available to everyone paying council tax in bands A to D and all those receiving support from the Council Tax Reduction Scheme in all council tax bands. A further £25m will be available to local authorities in the form of a discretionary fund.

I will be chairing a second cost-of-living summit in the coming months to look again at more we can do, working with partners, to address the inequalities that the current crisis has brought so starkly into focus.