‘Some People at the Edge’: 40% of UK Households May Be in Fuel Poverty if Gov’t Doesn’t Intervene

In late February, Foreign Secretary Liz Truss warned that the sanctions London had slapped on Moscow in retaliation for Russia’s special military operation in Ukraine would worsen the UK cost of living crisis, and that Britain must be prepared to take an “economic hit”.

At least 40% of British households will live in fuel poverty this autumn if a “very substantial” government intervention doesn’t take place, Michael Lewis, the chief executive of the energy firm E.ON UK, has warned.

Fuel poverty is a term used to describe those households who have to spend more than 10% of their disposable income on home energy in order to maintain an adequate standard of warmth.

“Frankly, some people are at the edge, they simply cannot pay and that will get worse once prices go up again in October,” which will see “a price increase and an increase in consumption, that's when it's going to hit and that's why we've called for more government intervention”, Lewis told the BBC on Monday.

The E.ON UK chief executive stressed that “the most important thing is that the government intervenes – it is up to the government to decide how they fund that”.

According to him, “All I would say is that when they're taxing to address this challenge, that they tax those with the broadest shoulders”.

He said it was “impossible to say”' what the new price cap will be in October, but added that suggestions the figure could rise to £2,800 ($3,519) are in “the right ballpark”. Lewis declined to rule out that the price cap could finally soar to £3,000 ($3,770) in the autumn, as compared to £1,277 ($1,605) that families were paying before April.

Lewis argued that the rise in prices was “predominantly” down to the ongoing Ukraine conflict, which disrupts energy supplies from Russia, adding, “in my 30 years in the energy industry I have never seen prices increase at this rate”.

“The gas price has gone up significantly, the gas price also drives up the electricity price because gas generation sets the price for electricity. We are seeing a significant number of people in fuel poverty, that’s to say more than 10 percent of their disposable income spent on energy,” he said.

Shortly after the start of Russia’s ongoing special operation to "demilitarise and de-Nazify" Ukraine on 24 February and the imposition of Western sanctions on Moscow, the price of futures for gas in Europe skyrocketed to over $1,636 per 1,000 cubic metres, up 60% from previous indicators.

Rachel Reeves MP, Labour's Shadow Chancellor of the Exchequer, responded by saying that Lewis’ comments “underline how tough the cost-of-living crisis is for families, and how Conservative delays will see the situation get even worse”.

“The government must act now, by bringing in a windfall tax on oil and gas producer profits to cut bills,” Reeves emphasised.

No 10 earlier made it clear that the government opposes a windfall tax as “ideologically unconservative”, amid reports that Chancellor Rishi Sunak is keen to press ahead with what has been dubbed “windfall tax lite”.

The Independent reported that “the windfall tax lite” would impose “a lower rate on energy firms prepared to invest billions of pounds in the economy, possibly in new nuclear power stations and offshore wind farms”.

Inflation rates in the UK has meanwhile reached a 40-year high at 9 percent, something that was driven by record prices for gasoline and diesel, as well as the soaring cost of food, clothing, and furniture in the country. UK government ministers previously warned that the “severe sanctions” Western countries slapped on Russia over its special operation in Ukraine would have a knock-on effect on the cost of living in Britain.