Fuel poverty 'spiralling', warns lobby group

Around 300,000 extra households could be forced into fuel poverty within weeks, according to a lobby group.

The Fuel Poverty Advisory Group has called on Prime Minister David Cameron to tackle what it describes as a "spiralling" problem.

Energy prices have risen by 7% on average this year, taking the average annual direct debit bill to £1,247.

A household is considered to be in fuel poverty if more than 10% of its income is spent on home heating.

The Fuel Poverty Advisory Group, which is funded by the Department of Energy, estimates that nine million people could meet that criteria by 2016, and that 300,000 additional homes will be added to that figure this winter alone.

Consumer groups want the government to use some of the £4bn in annual carbon taxes set to be collected to help tackle this issue - including a more ambitious programme of home insulation.

From next year energy firms will be required to cut the number of different tariffs on offer to four, and place customers on the cheapest available price in their chosen tariff.

The advisory group said the government should create a cross-departmental body to ensure a "joined-up approach" as well as creating a new duty for local authorities to meet fuel poverty targets.

It also said an urgent impact assessment of welfare reforms on fuel poverty was needed.

'Toxic cocktail'

"With a cold winter, welfare reforms cutting incomes, and all at a time of austerity measures and other rising household costs, the plight of the fuel poor has never been more serious," said Derek Lickorish, chairman of the FPAG.

"Millions are living in misery due to high energy bills. Yet time is running out for the government to fuel poverty-proof the homes of those on the lowest incomes.

"A toxic cocktail of rising wholesale prices, the high cost of energy reforms and cuts in incomes for many households means fuel poverty levels are set to sky rocket without radical action."

Last month energy regulator Ofgem and the government outlined proposals for simplifying the energy market.

Under government plans, consumers will be given the chance to choose from one of four types of tariff. These must include a variable rate deal and one with a fixed rate over a certain period of time. Others may include a green tariff or similar, whatever the supplier thinks is competitive.

Suppliers must offer just one price for each of the four tariffs. Customers will be put on the cheapest price of the tariff of their choice.