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Welfare reform will increase fuel poverty

January 31st 2013

Changes to social security benefits are likely to result in a sharp increase in fuel poverty, Bevan Foundation director Victoria Winckler told delegates to the National Energy Action Cymru conference on fuel poverty in Wales on Thursday, 31st January 2013.

Victoria outlined the main changes to benefits that were likely to affect one in four households in Wales, then set out how she thought they would affect fuel poverty. First, she said, almost all households that receive a benefit will see their incomes squeezed as benefits are uprated at less than the rate of inflation. In addition some households will lose out because of changes in eligibility criteria e.g. they are deemed to have a spare bedroom and so lose up to 25% of their Housing Benefit, or are found fit for work and lose their Employment and Support Allowance.

Second, Victoria said, some households risk facing periods without benefits altogether as the risk of administrative errors increases with the multiple changes to benefits. The potential for families facing real crisis with their fuel costs, e.g. having no heat or light at all, was significant she argued.

Third, some households are likely to face difficulties budgeting as benefit payments switch to monthly and are paid to one person in the household.  Many claimants find weekly or fortnightly benefit payments help budgeting and the change to monthly payments could leave some households using short-term, expensive debt to cover their fuel costs at the end of the month.

Fourth, there is likely to be increased turnover in housing with some moving out of social housing and into the private rented sector in order to find smaller accommodation. Private rented housing usually has poorer energy efficiency than social housing and also households may face coping with new payment arrangements or tariffs as a result of moving.

Improving the energy efficiency of homes remained a priority, Victoria said, but schemes such as NEST that rely on benefit receipt to ‘passport’ claimants to their schemes would need to be reviewed.  

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