Taking on fuel poverty and the ongoing energy crisis

British Gas Energy Trust supports people at risk or in fuel poverty. With energy companies going bust and heating costs rocketing, this guest blog from Jessica Taplin, Chief Executive of British Gas Energy Trust, explores what works and what needs to change if we are to support vulnerable households through the energy crisis this winter.

Before coronavirus, an unacceptable 14.5 million people in the UK were caught up in poverty, equating to more than one in five people. From the pandemic beginning in Spring 2020 until Autumn 2020, almost 700,000 further people in the UK, including 120,000 children, were plunged into poverty, pushing the total number of people in the UK living in poverty to more than 15 million—23% of the population.

Poor households already struggling post-pandemic have now been hit by a perverse ‘perfect storm’—no savings, increased debt, inflationary cost increases and significant rises in energy costs, all just as winter bites.

The statistics suggest the situation is going to worsen. Winter and indeed 2022 look challenging. The review of the price cap period for energy and an increase in National Insurance are likely to exacerbate the situation in April for families struggling to keep their heads above water.

Against this bleak backdrop, we have seen the collapse of energy suppliers, over 22 at the time of writing. With the failure of Bulb, a further 1.7 million customers have been affected.

Martin Young, an energy analyst at Investec, said that (excluding Bulb customers) the energy company failures translate into a cost of £1.5bn for the surviving suppliers. Whilst according to Ofgem, the cost of taking on these customers is £700 each, i.e. the cost of providing energy is £700 more than what a customer can be charged under the current cap. The maths doesn’t seem sustainable.

Increasing household bills

As well as the pressure on the remaining suppliers, the collapses and increasing prices place a very real financial burden on every household in the country—the figures suggest an increase of £75 to £150 to every energy bill.

Important questions are being asked about what lies ahead for vulnerable consumers. As a funder, we must now ask ourselves what works and what needs to change when it comes to supporting vulnerable households in or at risk of fuel poverty.

Funded solely by British Gas since 2004, but independent in its operations, British Gas Energy Trust has provided consistent financial help for vulnerable households and remains one of the last independent, grant-giving energy trusts in the UK. With thanks to British Gas’s support, we have directed well over £100m of support to people and families at risk of fuel poverty, working together to help over 500,000 households. Whether those seeking help are British Gas customers or not, we have worked hard to ensure there is help available.

Since 2019 we’ve been working with the Centre for Sustainable Energy, to evidence the effectiveness of our programmes at achieving our outcomes. The research supports our current delivery approach, stating that both the Direct Grant Funding Programme and the Organisational Grant Programme have ‘shown their ability to reach individuals and groups that research has identified as most at risk of fuel poverty and fuel debt. Considerable average outreach was achieved across British Gas Energy Trust programmes for groups identified as most at risk, including low-income households; recipients of Universal Credit; renters; households with children; younger and older people; and ethnic minorities.’

Beneficiaries from both programmes reported they had: improved finances; were better able to manage money worries; adopted energy wise behaviours; have been able to stay warm in their homes; and found it easier to afford fuel costs.

So, considering the challenges we currently face, what needs to now happen?

Taking on fuel poverty this winter

We must target grant provision towards groups at risk of fuel poverty who are currently under-represented, like private sector tenants. This work is currently underway—we have been working with NPC on mapping need across the UK, and early next year we will share the latest needs mapping analysis that will inform our targeted funding approach for 2022.

Recommendations from CSE’s Nov 2021 report show why we need to anticipate the needs of vulnerable clients and also advice organisations, as smart products and services become more widely available. We should look for interventions that would lever positive benefits for fuel poor groups.

For example, advice organisations are responsive, but they report that clients often ask for help when their situation is desperate. A more effective mechanism could be to use billing or smart meter data to identify clients that are struggling to pay their bills; helping client billing issues to be addressed proactively, preventing stress and ill-health—this might also involve referral to trusted advice organisations.

Both of these points—proactive use of billing and energy data by energy suppliers, and signposting to third party money advice support—were identified as good practice in a recent Ofgem report. We should also instigate an effective method for advisors to obtain client consent. Advice organisations appear to spend a disproportionate amount of time trying to obtain client consent in order to correspond on their behalf to help solve their issues. This is a costly waste.

Plus, we should consider the optimal mechanisms to stimulate local partnerships and referral networks, as well as how a place-based approach with greater emphasis on partnership working could ameliorate long-term outcomes. This means taking advice and support to those who need it, in their locality, rather than assuming that people can access ‘self-service’ support—Bromley by Bow are an excellent example of whole person support tailored to support the community, in which they are a vital hub.  We should also engage with organisations that address some of the wider barriers to people feeling able to engage with organisations, this includes working with local community groups, and social prescribers. For example, we are currently funding an initiative with Citizens Advice Sunderland.

As we learn and evolve, we must maintain our focus on ensuring that our programmes continue to provide help and support to those most in need. It is clear from our research that they currently do just that. With our Debt-Write Off Grant Programme: 59% of the recipients are in receipt of Universal Credit, and 60% of recipients have a household income of less than £14,999, rising to 81% if households with an income under £20,000 are included. Plus, 99% of recipients have no savings at all.

With our Covid Response Fund, which recently provided money and energy advice services in priority areas, 63% of recipients reported a long-term health condition or disability. Compared to 38% of the rest of the adult UK population. More can be read about the programmes and the impact they had, together with case studies, on our website.

We continue to work closely with British Gas, our funder, and as we look to 2022 and beyond, we will continue to adapt and evolve our programmes and approaches to meet the challenges ahead. We will continue in our mission to alleviate the detrimental impact of poverty.

15 million people in the UK are living in poverty and heating costs are rocketing. This blog explores the ongoing energy crisis and how we can combat fuel poverty this winter: Click To Tweet