The causes of fuel poverty

No one should have to live in fuel poverty!

Fuel poverty is caused by low incomes, high fuel prices, poor energy efficiency and poor quality housing. Playing into it is a national energy system colonised by profit-driven companies, and a ‘captured’ regulator, Ofgem, that has failed in its duty to protect people.

Low incomes and unfair taxes

The UK has the world’s sixth largest economy, and a high GDP per person (gross domestic product), but over the past 15 years there has been a “dramatic collapse in the living standards of the poorest 40pc in society.” This is due to a combination of low earnings, low pensions, low welfare benefits, poor and expensive housing, and the loss of access to health and other services that used to be provided by the state.  All of this is worse for women, people of colour, families with children, disabled people, and people in disadvantaged parts of the UK. Many of us are now worse off than people in poverty in Eastern Europe, and far worse off than those in Germany or France.  Fuel Poverty is active in supporting demands on pensions and benefits, particularly disability benefits. We also support the movement for payment for caring work, and the mounting pressure for effective and substantial taxes on wealth 

Bad housing and heating

Most of the UK’s 29 million homes need upgrading – only half meet even the low standards set in the 1970s. Mould and damp are a growing issue as poor insulation, poor ventilation, poor maintenance, unaffordable heating and overcrowding combine, with serious health and wellbeing consequences. Between 4% and 27% of homes are affected by damp and mould, skewed towards households at higher risk of poor health. Profiteering and lack of quality control has also meant retrofit schemes have often been done more harm than good, while ongoing Government delays to new building standards are ensuring that developers continue to churn out expensive to heat homes. 

Heat networks and heat pumps could both help end fuel poverty, but both have been disastrously managed in the UK, leading in many cases  to gross inefficiency and  high costs. 

The high cost of energy

The energy industry in the UK, backed by the government, has made little use of the huge natural resources available on our island: wind, sun, tide and waves, preferring gas.  Entirely owned by multinational corporations, the industry follows its shareholders interests – motivated by profit – and not the interests of consumers or the climate.  

Over the past few years, this has only got worse, with prices being artificially inflated. 

Artificially inflated energy pricing

Over reliance on fossil fuels in the country’s energy system meant that when international gas prices rose with Putin’s invasion of Ukraine, residential bills shot up. Gas is used in the majority of home heating, and electricity prices are also set by the cost of gas most of the time under the marginal pricing system, generating huge windfall profits for electricity generators.

The government and Ofgem failed to take basic precautions before 2022: 

• they allowed gas storage units to close; 
• they failed to invest in meaningful energy efficiency programs; 
• they let privatised retailers expose consumers to volatile wholesale prices without buying in advance. 
• hugely expensive nuclear projects have benefited a French nationalised industry at the expense of UK bill payers. 
• above all, they have made little use of the huge natural resources available on our island: wind, sun, tide and waves, preferring gas.

The way Ofgem has handled things since, has been to continue to ensure that obscene profits are made by a handful of private companies: energy producers (e.g. Equinor and Shell); and the firms that control our energy grid (e.g. National Grid, UK Power Networks and National Gas Transmission) as well as suppliers (e.g. E.on and British Gas). 

Just 20 energy companies have made a staggering £483 billion in profits since 2002 – enough money to build 966 mid-sized hospitals in the UK or train seven million nurses.

The cost of the UK gas network to consumers has surged 38% since 2021 – boosting the profits of Chinese and Qatari Government-backed funds that own much of it.