Millions face fuel poverty as government policy needs 'massive shift'

"I'm right on the edge", a decorator who pays £4,000-a-year to heat and light his own home, tells ITV News Reporter Martha Fairlie

Four in 10 people in Britain could fall into fuel poverty in October, according to energy bosses calling for more support for vulnerable households.

Scottish Power chief executive Keith Anderson said the government should take £1,000 off the bills of the poorest people in the country in October.

He suggested the government or billpayers would then pay this off over 10 years.

“I think the problem’s got to the size and scale that it requires something significant of that nature where those people who are deemed to be in fuel poverty or vulnerable need something of the size and scale that puts their bills back to where it used to be before the gas crisis,” he told MPs on the Business, Energy and Industrial Strategy Committee.

'I honestly believe the size and scale of this... is beyond what this industry can deal with': Scottish Power's boss warns there must be a 'massive shift' in government policy

Mr Anderson called that “stage one”, which should be followed up with a social tariff that gives poorer households discounted energy. This should replace the current price cap, he said.

He added it is “perverse” that customers with prepayment meters – who are likely to be more vulnerable – pay more for their energy than those who pay by direct debit.

E.ON UK chief executive Michael Lewis said his company would support a social tariff, but called it a long-term measure.

He said that between 30% and 40% of people in Britain might go into fuel poverty from October when the price cap is likely to rise significantly again.

EDF estimates that its most vulnerable tenth of customers will go from paying £1 in every £12 they have on energy bills to £1 in every £6.

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Centrica boss Chris O’Shea said prepayment customers will start seeing a real increase in October.

At the start of April the price of energy soared by around 54% for the average household, but meanwhile the weather is getting warmer, so consumption is likely to drop.

Those who are paying their energy bill by direct debit will see prices go up this summer to build up credit for the winter, but prepayment customers will not do that so will see an even bigger rise in October.

Two months ago the Government announced a £200 rebate to be applied to energy bills in October, which will need to be paid back over the next few years.

Mr Lewis called for the £200 to be increased if bills go up significantly again in October, and for the repayment period to be extended if necessary.