First, the Huffington Post:
The number of UK children living in fuel poverty has risen to 1.6 million as British Gas revealed they made £606 million in profit last year from their residential arm, months after a price hike.
Research by Energy Bill Revolution found that 130,000 more children are living in freezing homes compared with 2010, while British Gas residential saw an 11% rise in profits.
Centrica, which owns British Gas said on Wednesday the profits were down to last year's colder-than-normal weather, which saw gas use leap 12% and in spite of a 1% fall in customer accounts to 15.7 million in 2012.
Studies show that long-term exposure to a cold home can affect weight gain in babies and young children, increase hospital admission rates for children and increase the severity and frequency of asthmatic symptoms. Children in cold homes are more than twice as likely to suffer from breathing problems, and those in damp and mouldy homes are up to three times more likely to suffer from coughing, wheezing and respiratory illness, compared to those with warm, dry homes.
What’s more, struggling with high energy bills can impact adversely on the mental health of family members. Fuel poverty may even affect children’s education, if health problems keep them off school, or a cold home means there is no warm, separate room to do their homework.
- There are 26 million properties in the UK
- A national housing stock that is not fit for purpose
- Many are old – 8.4 million were built before 1945
- 70% of homes are owner occupied
- 43% of homes are ‘hard to treat’
- Many don’t have basic insulation
- A squeeze on the lowest household incomes since the 1970s combined with the added pressure of a recessive economy in recent years has meant that, faced with soaring energy costs, vast numbers of people are struggling to heat their homes.
- Burgeoning inequality
- The Green Deal and ECO, which will replace Warm Front and CERT, will see the poorest 10% spending a greater fraction of their cash on their energy bills.
- From 2000 to 2010, average electricity bills increased in real terms by 30%
- Spiralling energy prices
- Average gas prices increased in real terms by 78%
- Rises in prices having mainly been driven by rising costs of fossil fuels.
- The prices of fossil fuels are predicted to increase another 30% in the next 10 years. This will tip millions of people into fuel poverty in the UK.
...the proposed Energy Company Obligation (ECO) [is] to be introduced in the spring of next year. This mechanism will force the energy companies to spend about £1.3bn a year for the next ten years on subsidising home energy improvements. But only about 25% of this amount, or something around £375m a year, will go towards those with the lowest incomes and greatest risk of fuel poverty.
This may sound a lot. Unfortunately it isn’t. Compare it with today’s position: the government obliges the energy companies to disburse £2.4bn a year through the CERT programme. Rising prices mean that the proposed £1.3bn will achieve less than half of the old figure. Of that £2.4bn, about 40% is spent on vulnerable homeowners, or about three times what will spent under the future ECO plan for helping the fuel poor.
Separately, the government also provides funds today for the Warm Front home insulation scheme. Even after the public expenditure cuts of 2010, Warm Front disburses £100m a year to the most needy for home improvements. This help will cease entirely at the end of the year.
ECO is only expected to remove about 450,000 homes from fuel poverty by 2022m, or less than 10% of those classified as in this position. That’s it: a one percent reduction in fuel poverty per year, even under the Department’s own estimates.
The Green Deal and ECO are highly regressive, with the bottom decile, excluding those small numbers who get help from ECO, spending a greater fraction of their cash on energy than if the Green Deal and ECO did not exist. By contrast the top half of the income distribution is expected to see virtually no change. So even under the government’s own figures, ECO is expected to take more from the poor than it gives back in free or subsidised energy efficiency benefits.
So what to make of it all? Well, as you can see from the first video, Sam Laidlaw thinks he has a good justification for British Gas' profit rises. A key point he makes relates to share holders - British Gas have increased dividends to shareholders, at the same time that prices have been rising for consumers.
Why? To ensure future investment (they invested £2.7bn last year, according to Laidlaw). It is true that a company has to be profitable to be able to invest, but there is clearly something wrong when shareholders get richer as children get ill in cold homes.
It is worth noting that it is not all British Gas' (or any of the other major energy firms) fault that children are in fuel poverty. Poverty is the main reason parents can't afford their bills, period. However, the concentration of wealth in the hands of shareholders in such circumstances simply cannot be classed as a necessary evil when we have literally millions of people living in such conditions.
We desperately need an energy system that protects the most vulnerable. We must see investment in energy sources that will end reliance on increasingly expensive fossil fuels in the long run, and we need some serious policy to address the terrible state of housing stock insulation for those who are vulnerable, right now.
This won't end poverty in the UK overnight; but it would make those nights a little less dangerous for children entitled to a proper childhood. The Coalition's failure to deliver, while completely unsurprising, is yet another damning example of their disregard for the most at risk in the UK.