Government will need to find better targeted support than Winter Fuel Payments to help the 7.7 million households suffering from fuel stress

7.7 million households in England are at risk of fuel stress this winter, including the majority of families with children. The Government will therefore need to do more to support vulnerable households who are no longer eligible for Winter Fuel Payments (WFP) and those who never have been, according to new research published by the Resolution Foundation today (Tuesday).

Cold Comfort examines the extent of fuel stress across Britain – defined as families needing to spend more than 10 per cent of their income after-housing-costs on heating their homes (which is the definition of ‘fuel poverty’ in Scotland and Northern Ireland) – and how policy can support these households, particularly in the context of the decision to end the universal WFP for pensioners.

Overall, 7.7 million families suffered fuel stress in England in 2023-24 (37 per cent of all households). The situation is most stark for single parent households, with three-in-four (77 per cent) likely to experience fuel stress this winter.

The majority of couples with children are also likely to experience fuel stress – at 56 per cent – which is more than twice the rate seen among pensioners households, where almost one-in-four pensioner households (24 per cent) are in fuel stress.

The Foundation says the concentration of fuel stress reflects the reality that working-age families are far more likely to be living in poverty than pensioners, and illustrates why WFP are so poorly targeted. Since they were introduced in 1997, the annual value of the Basic State Pension has increased by £2,600 in real terms, equivalent to 13 times the value of WFP, reducing the need for additional universal support.

However, the scaling back of WFP does risk creating hardship for some low-income pensioners, one million of whom are no longer eligible for the payment. To address this, the report calls on the Chancellor to introduce new support in her upcoming Budget to help all households experiencing fuel stress.

Through their analysis, the Foundation identifies an expanded Cold Weather Payments scheme as being the most promising avenue for a quick-fix that protects vulnerable households – including pensioners, working age people and children – in time for this winter. Critically, an expanded version of this scheme would allow the Government to support low-income pensioners who no longer qualify for WFP.

Currently, eligible recipients are automatically given a £25 payment when local temperatures drop below freezing for a week or more. These payments are tied to income via benefit eligibility, but also to energy consumption as a function of being conditional on local temperature. This existing scheme could be expanded, both by increasing eligibility and raising the temperature at which payments are triggered.

The Foundation notes that even if a reformed Cold Weather Payments scheme were made available to all pensioners, the cost would be much less than the universal WFP, because the award is only made during a cold snap, and only to those parts of the country experiencing cold weather. If this policy was reformed correctly, the Government could maintain universal pensioner support, extend support to poorer working-age families, better target on energy need, and retain the majority of the fiscal saving from the WFP cut.

Looking beyond the immediate challenge of this winter, the Foundation recommends the development of a social tariff for energy bills. This would allow the Government to assess incomes and energy use directly (rather than through proxies like benefit receipt or temperature) in order to efficiently target and scale the support needed by households experiencing fuel stress.

It adds that the widespread experience of fuel stress also underpins the urgent need to improve insulation and energy efficiency of homes, in order to protect households from energy shocks on a long-term basis.

Alex Clegg, Economist at the Resolution Foundation, said:

“Around 7.7 million households are facing fuel stress this winter, including over half of families with children. These stark statistics illustrate how poorly targeted Winter Fuel Payments are, and why alternative support will be needed this winter.

“Couples with children are more than twice as likely to experience fuel stress as pensioner households, so any new support should not be limited to pensioners. Reforming and expanding Cold Weather Payments offers a viable quick-fix solution to help keep households warm when the mercury drops this winter.

“Looking beyond this winter, the Government should prioritise developing a social tariff and investing in energy efficiency for our homes. This would help to ensure that vulnerable families are insulated from future energy shocks, whatever their age or circumstances.”