Pensioners are facing a cost-of-living catastrophe as they are hammered by rising prices while relying on fuel support that has not gone up in more than ten years.
Former Pensions Minister Baroness Ros Altmann, writing in Money Mail today (see below), is calling on the Government to introduce emergency measures to save the elderly from fuel poverty.
Money Mail has also outlined four ways the Government could ease the cost-of-living crunch pensioners are facing.
Heat or eat? An estimated 150,000 older households could likely be plunged into fuel poverty this winter, according to charity Age UK
These are: bolster heating benefits for the elderly; cut taxes on energy bills; re-consider the triple-lock suspension; and increase take-up of pension credit.
The energy crisis has been growing for more than four months, and yet no extra support has been made available.
The Business Secretary is today to hold crunch talks with energy suppliers. But campaigners are calling for more urgent measures to be put in place for elderly households, who will be worst hit.
This is because pensioners tend to spend a higher proportion of their household budgets on energy bills.
Baroness Altmann says the issue is ‘literally a matter of life and death’ for elderly people, who die in their thousands from respiratory illnesses each winter. She says a quick and effective way the Government can offer support is by increasing heating benefits.
This includes the winter fuel payment which was introduced in 2009. Households with a state pensioner under 80 are entitled to £200 while those with a resident 80 or over are entitled to £300.
Similarly the warm home discount — a one-off reduction on electricity bills to those on certain benefits between October and March — has stayed at £140 since it was introduced in 2011.
Frozen: The warm home discount – which offers a one-off discount on electricity bills to those on certain means-tested benefits – has stayed at £140 since it was introduced in 2011
According to Government data, the average annual electricity bill in England and Wales in 2011 paid by direct debit was £480.
Meanwhile cold weather payments provide extra money for the poorest citizens when temperatures drop below freezing for a successive period of seven days between November and March.
But this has been stuck at £25 a week since 2008, when the average annual electricity bill was £476 and annual gas bills were £520.
The issue is compounded by the scrapping of the triple lock which means the state pension will only increase by 3.1 per cent — despite inflation predicted to hit 6 per cent this year.
Four ways to ease the crisis
- Improve heating benefits for the elderly
- Cut taxes on energy bills
- Reinstate the triple lock pension promise
- Increase take-up of pension credit
Baroness Altmann adds that not only are payments inadequate, but take-up remains critically low. This is because cold weather payments and the warm home discount are available automatically to those on pension credit.
But around four in ten pensioners on a low income eligible for the benefit are not receiving it, meaning 920,000 pensioner households are missing out on payments worth £1.6 billion every year.
In 2015, green levies accounted for just 7 per cent of an average dual fuel bill (£86 out of £1,165), according to energy regulator Ofgem. By 2020 that proportion had doubled to 15 per cent (£182 out of £1,189).
At the weekend 20 Conservative MPs and peers urged the Prime Minister to scrap energy taxes to prevent further households from slipping into fuel poverty. The crisis has been bubbling since August when wholesale energy costs started to rise drastically.
In total, 2021 saw 28 suppliers go bust, with 23 failing in a three-month period alone. Money Saving Expert founder Martin Lewis warned this week: ‘We need to look at what we can do now and how we can protect those people who will need to choose between heating and eating.’
Ofgem’s energy price cap, £1,277, sets the maximum price energy firms can charge an average household on a default tariff per year.
The clock is now ticking until the Government agrees on a new price cap which will come into effect on April 1. It is widely expected to increase to £2,000.
Bills threat: Experts estimate households could face another £20bn on their annual energy bills if the energy price cap rises to £2,000 in April
According to forecasts by comparison site The Energy Shop, this could leave UK households with a collective extra £20 billion added to their annual energy bills.
This is estimated on the assumption all households are left on a standard variable tariff. In the past, there were only around 11 million households on a standard variable tariff.
However fixed tariffs almost disappeared overnight in the second half of last year as they became too expensive for firms to offer.
Some suppliers have started offering fixed tariffs that far exceed the price cap.
It was reported last week that Ovo Energy, the UK’s second biggest supplier, was offering a fixed-rate deal worth just under £4,200.
For state pension recipients, this deal would cost them nearly half of their monthly income. An Ofgem spokesman says: ‘Our top priority is to protect energy consumers and the price cap has protected millions of households from the full impact of surging global gas prices this winter.’
A spokesman for the Department of Business, Energy and Industrial Strategy says: ‘We recognise families are facing pressure, which is why we are taking £4.2 billion of decisive action to help households, and the energy price cap remains in place to shield millions from high global gas prices.
‘We are also supporting vulnerable and low-income households through initiatives such as the new £500 million household support fund, warm home discount, winter fuel payments and cold weather payments.’
We need to act now to protect elderly from fuel poverty
Warning: Former pensions minister Baroness Ros Altmann
By ROS ALTMAN
Pensioners are facing a perfect storm this winter as fuel prices and inflation soar but pensions fail to keep up.
The Government must address the cost-of-living crisis for elderly citizens who are most vulnerable at this time of the year. Every winter, tens of thousands of pensioners die — often due to respiratory illnesses caused by the colder weather.
With so many lives at stake, the Government must respond to this emergency. And today I am calling for urgent increases to fuel support as part of a winter manifesto.
Even in a normal year, with the lowest state pension in the developed world, the costs of heating means that the UK’s elderly tend to succumb to bad weather in large numbers.
But this year is far from normal, partly due to people isolating, but also because of the sharp spike in heating bills.
Regulator Ofgem’s increase in the energy price cap in October has already hit many pensioners, and further hikes are in the pipeline.
Meanwhile, the meagre 3.1 per cent increase in state pensions from April will leave more pensioners living on inadequate incomes.
The Government would do well to start with pension credit. Around four in ten people who are eligible are not receiving it.
This is the lowest take-up rate of all means-tested benefits and reflects the reluctance of pensioners to claim extra help. They are often too proud and do not realise this is their right, not a handout.
The Department for Work and Pensions and HM Revenue and Customs could work together to identify those who are entitled to an increase in payments rather than waiting for people to claim.
Calling pension credit a ‘state pension top-up’ and helping pensioners understand that the money is their right, with a national advertising campaign, is urgently required to raise awareness.
The benefit should be made available to more older people. In recent years, the eligibility criteria have been significantly tightened.
Rather than being available to any household with one person aged over 60, pension credit will be paid only if both members of a couple were born before September 1955.
That means many pensioners who would previously have received extra help with their living costs are no longer able to do so.
Finally, winter fuel payments are lower than in 2009 after being reduced in 2011. Cold weather payments of £25 a week have not risen since 2008 and the warm homes discount of £140 a year has not increased for more than ten years.
All three should be increased for pensioners to reflect the huge rise in heating bills.
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