NEWS

2025 is shaping up to be another challenging year for energy consumers. Energy prices are rising, with the Ofgem price cap rising by 6.4% for the period between April and June. There aren’t big tariff discounts available in the marketplace to tempt people to switch. In addition, more and more people are in energy debt, as MC2 Capital explained in this article. 

However, another growing crisis involves ‘fuel poverty’. A new report from the energy supplier So Energy and energy consultants BFY Group defines fuel poverty, explains why the government’s current remedies are not working and proposes a better solution. In this article, we’ll tell you more about it.

The UK fuel poverty crisis

The So Energy report defines fuel poverty as a household spending more than 10% of its income (after housing costs) on energy. By this definition, there are 5.4 million households in Britain experiencing fuel poverty. That’s around one in five households. Experts predict that this number will only increase in the future, with energy costs high and rising. 

The government has support schemes in place to try to alleviate fuel poverty. However, the report lays out why it isn’t working.

Why government support isn’t working

According to the So Energy report, one in five UK households is classified as fuel-poor, but most do not receive any government support. The government currently provides support through programmes like the Warm Homes Discount (WHD) and Energy Company Obligation (ECO). However, the way these schemes are targeted means that the help isn’t reaching the people who need it the most:

• 3.1 million households receive WHD, but only 1.4 million are in fuel poverty
• Only 45% of the £500 million allocated to the WHD scheme reaches those in genuine fuel poverty
• 4 million households in fuel poverty do not receive any government support for their energy

The reason for this discrepancy lies in the eligibility criteria. Qualification is often based on means-tested benefits, which tend to miss many struggling households. The report believes that a more effective system is urgently needed with such a large proportion of fuel-poor households excluded from support.

A better solution?

With millions of families struggling, targeted intervention like this could offer a real solution. The government plans to expand its Warm Homes Discount next winter, adding around 3 million more households to the scheme, taking the total number of recipients up to 6.1 million. However, if the targeting is flawed, will it reach those who most need it?

The So Energy report calls for the government’s existing packages to be replaced with a Warm Homes Support Scheme – a more targeted approach to fuel poverty. The proposal aims to provide deeper, tiered support, prioritising those most impacted by fuel poverty.

Targeting and tiering support wouldn’t be that expensive for the public purse. The estimate is £2.8 billion per year, or an extra £100 per billpayer. However, the benefits could be significant, reducing the fuel poverty gap by 75% and lifting 3 million households out of fuel poverty. 

Time to act

While it’s good news that the government is acting on fuel poverty by expanding the WHD scheme, it could be even more effective if they reformed the eligibility criteria to ensure support reaches the most vulnerable. 

With warmer weather on the way, now is the time to make changes before the price cap rises and winter comes again. While there are many ideas to get the marketplace working more efficiently again, you can’t rely on suppliers to solve fuel poverty. It must be an industry-wide collaboration. We hope the industry will get together and urgently act to alleviate fuel poverty.