Half a million low-income households face missing out held under Ofgem’s proposed new safeguard price cap, National Energy Action (NEA) has warned.
New research, published to tie in with the launch of NEA’s winter Warm Homes Campaign, estimates that more half a million eligible households will not be protected under Ofgem’s proposed tariff.
This is because they are working age and so do not automatically qualify for the Warm Homes Discount (WHD), which is the basis Ofgem plans to use to determine eligibility for the safeguard tariff.
The number of WHD discounts is capped and smaller suppliers do not have to provide it meaning their customers will not be able to access the safeguard tariff, according to the NEA.
Around half a million low income working age households, who already miss out on the WHD rebates will also fail to benefit from the safeguard tariff, estimates the fuel poverty charity. NEA reckons that missing out on the WHD and linked safeguard tariff savings will leave low income customers approximately £260 out of pocket.
The problems for these low income households will be compounded by the roll out of the universal credit, which cuts support through the benefit system for low income working households and imposes a six week waiting period before cash can be paid out.
Overall, the report says that up to 1 million fuel-poor families in England will not have the cash to meet basic living expenses this winter.
NEA calls in the report for the obligation to deliver energy rebates via the WHD scheme to be extended to all suppliers with more than 50,000 customers in order to widen the planned price cap’s coverage.
It also urges the government to end its freeze on working-age benefits, energy discounts and tax credits by uprating them in line with inflation.
Peter Smith, director of policy and research, said: “These households are mostly working-age, fall into the lowest income deciles and in some cases are already facing thousand pound gaps between their incomes and the essential cost of living”.
“Our new report highlights the scale of the impossible choices over a million families will be making this winter. The report illustrates the catastrophic impact Universal Credit could have on these families who have no savings to insulate them from falling into debt, going hungry and not heating their homes over the current 6-week waiting period.
“We aren’t talking about needing to cut down on a few luxuries; we’re seeing people switch off the heating for the whole winter and kids only eating one meal a day. We know others are adopting unsafe behaviours in an attempt to keep warm, withdrawing entirely from society or building up bigger and bigger debt problems.”