Astronomical energy price rises leaving older people in crisis

Age UK demands immediate government action to prevent millions more falling into fuel poverty

With experts predicting that energy bills could rise by up to 50 per cent this spring[i] – adding around £600 to the average annual bill[ii] – Age UK is warning that this unprecedented increase could trigger a national emergency for millions of older people.

The Charity has written to the Secretaries of State for Business, Energy and Industrial Strategy (Rt Hon Kwasi Kwarteng MP) and for Work and Pensions (Rt Hon Thérèse Coffey MP), published in full below, calling for immediate action to protect vulnerable older people from the cold this winter. This is the second letter from the Charity in as many months urging Ministers to take decisive action on energy bills to mitigate the potentially devastating impact of the escalating crisis, which will be nothing short of catastrophic for many older people without intervention.[iii] In addition, the letter underscores the need for longer-term thinking about how older people with the least ability to pay can be protected from energy price rises in the future. 

Rising inflation is already eating into the pensions of swathes of older people, but the Charity is warning that the unprecedented hike in wholesale energy prices will be totally unmanageable for those living on low fixed incomes – many of whom have few, if any, savings to fall back on. The latest government figures show that around 930,000 pensioners (eight per cent) say they could not afford an unexpected bill of £200.[iv] And given that older people are typically at home more than younger age groups and feel the cold to a much greater extent, the prediction of a bill increase of around £600 – the equivalent of spending an extra £1 in every £15 of the full new State Pension (nSP) on energy[v] – is likely to be a significant underestimation for many.

Many older people are already putting their health at risk by rationing their food and heating to keep their bills down. In recent months, the Charity has heard from thousands of older people who are already feeling the pinch and rationing their energy use as well as other essentials, including food. For example, older people who are too worried to use their oven and are living on soup and sandwiches instead; showering only every two days rather than daily; and constantly watching their smart meter and turning their heating off once their daily spending exceeds the meagre limit they have set.

Financial support for older people during the colder months has remained broadly unchanged for years and is nowhere near enough to match the scale of the current problem. In its letter to Ministers, sent earlier this week[vi], the Charity urges them to give older people the confidence to keep their heating switched on this winter, helping them to stay warm and well, at a time when we are still in a pandemic. This means providing strong assurances – and a financial package to back it up – so that people can keep their heating on, safe in the knowledge that they won’t have to face an extortionate and unaffordable bill in the spring.

There are many mechanisms through which the Government could fund vital support to see older people through this crisis. Age UK believes the following two policy recommendations, if implemented immediately, could protect older people on low and modest incomes from facing unaffordable energy bills over the coming year and encourage them to keep their heating on this winter:

• Cut the 5% rate of VAT from all household's energy bills from April till at least the end of 2022. If as expected, average bills rise to around £2,000, this would save a household just under £100. Energy suppliers must pass on these savings to their customers.
• Provide additional support (payments of up to £500) to older people on the lowest incomes. Using the eligibility criteria for the Cold Weather Payment would help guarantee automatic support to some of the homes that most need the help with their energy bills.

Caroline Abrahams, Charity Director at Age UK, said: “The astronomical hike in energy prices now widely anticipated has already forced many deeply anxious older people on low incomes to turn their heating down below what is comfortable or advisable, with some switching it off altogether for some or all of the day and night. Make no mistake, this situation will have a devastating impact on the health of our older population unless the Government intervenes quickly and takes their fears away.

“Older people, particularly those living on low fixed incomes, urgently need reassurance from the Government that they can afford to keep warm when low temperatures demand it, without going into debt – something most dread and will do anything to avoid. Ministers will have to go considerably further than offering token gestures of financial support such as adding £10 per year to the Warm Home Discount Scheme from next year. Energy price rises on the scale we are now seeing are unprecedented and the Government's response must be equal to the threat they pose to older people living on low and modest incomes.

“Many older people are well practiced at making a small pension go a long way, but that won’t be enough to protect them from the impact of rising household bills and soaring energy costs this time round. We are already hearing utterly heart-breaking stories from older people who are desperately worried about price increases and are rationing essential heating and even food as a result.

“This isn’t a crisis that’s arriving in the spring, it’s one that’s here already for many older people because their fear of unaffordable bills is driving them to not even try to stay adequately warm this winter. The Government must intervene swiftly and decisively to protect older people from their own stoicism and self-sacrifice. Every day that the Government sits on its hands, it increases the risks to older people’s health from living in a cold home.” 

While existing support such as Cold Weather Payments and the Warm Home Discount Scheme are vital for older people on a low income, they are only available to those who claim certain benefits such as Pension Credit.  Pension Credit opens the door to these and many other entitlements, but there are currently nearly a million (920,000) pensioner households missing out as they are not claiming it, and many more who are struggling but whose incomes are above the eligibility line.

Age UK is urging older people to call its free national advice line on 0800 169 65 65 before turning the heating off or down, to check they are receiving all the financial support available to them, including key benefits such as Pension Credit and Attendance Allowance. In addition, the Charity wants older people to be aware that energy suppliers have a duty to offer support if people are struggling with bills or debt, so is urging people to contact their supplier directly to ask about available support including an affordable repayment plan. 

ENDS

[i] https://www.bbc.co.uk/news/business-59760331

[ii] Energy UK, 2022. Household Energy Bill Affordability in 2022. Energy UK: Parliamentary Briefing. Available on request from Energy UK. 

[iii] Age UK first wrote to the Secretaries of State for Work and Pensions (Thérèse Coffey MP) and for Business (Kwasi Kwarteng MP) on 30^th November 2021 to express its grave concern about the impact of the current and projected energy prices rises on our older population, urging the Government to act quickly to protect them.

[iv] DWP (25 March 2021). Households below average income: for financial years ending 1995 to 2020. Data Tables, pensioners-hbai-detailed-breakdown-2019-20-tables, Table 6.10db and  6.11db_AHC.  https://www.gov.uk/government/statistics/households-below-average-income-for-financial-years-ending-1995-to-2020.

[v] A £600 annual increase in energy bills would be equivalent to an additional £1 in every £15.57 of the full new State Pension of £179.60 a week, or 6.4% of the income from the full new State Pension. However as most people do not receive the full New State Pension, this is also an underestimation.

[vi] The letter was sent, by email, on Monday 10^th January 2022.