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Opinion: Rising energy costs this winter are now a major concern for low-income households

Issy Petrie from the Society of St. Vincent de Paul says the government must act now to prevent people slipping in to poverty this winter.

Issy Petrie

AS WE FACE into the second winter since the pandemic struck, we are now contending with a cost-of-living crisis on multiple fronts.

Energy prices are soaring, we are seeing rents rise well beyond the control of Rent Pressure Zones and increasing transport costs are also pushing inflation up. 

The Budget may have brought some relief with a more generous Fuel Allowance to begin immediately, but this lifeline was unfortunately not extended to all those who will need it in the coming months.

Harsh winter ahead

The financial impacts of the pandemic remain with the households supported by the Society of St Vincent de Paul (SVP): many families will have used up savings or be carrying the burden of debt from the extra costs and lower incomes of the last 18 months.

Worrying levels of people in research we commissioned at the beginning of the year reported cutting back on heating or electricity due to cost, including 42 percent of people unable to work due to illness or disability; almost one in three renters; and 36 percent of one-parent families.

Throughout winter, those in receipt of the Pandemic Unemployment Payment will also see their incomes reduce as the payment is gradually withdrawn. The main welfare rate people will transfer onto has been shown to be inadequate and will remain so after it is increased by €5 in January.

Data from the Vincentian Partnership for Social Justice shows that in 2021 the gap between social welfare for a single adult and the cost of a basic but decent standard of living is €49 every week. For a lone parent with two children, the weekly gap is €82.  

During the coming months, we are deeply concerned that this crisis will come to a head as households are unable to find extra room in the budget for escalating energy costs. 

For those at risk of disconnection – or on a prepayment meter who cannot afford to top up – this could mean being unable to afford to stay warm and keep the lights on. This has serious health implications and is a situation that should be avoided at all costs.

At SVP, we spend between €4.5 and €5 million per year supporting people in energy poverty. Resulting from a combination of very low incomes, hard-to-heat houses, and energy costs, thousands of households cannot afford to keep their homes warm enough or must cut back on other essentials, including food, to meet their energy needs.

Rising energy

Energy prices – with electricity already the fourth highest in Europe – are now rising at a precipitous rate. While the price announcements that have been coming thick and fast are due to wholesale gas price rises being reflected in customers energy bills, low-income households will also feel the impact of the increase in the carbon tax when it kicks in next year.

There is serious cause for concern that these price increases will be the last straw for many households. Data from 2019 (the most recent year it is available) showed that approximately 240,000 people already couldn’t afford to keep their homes adequately warm. To prevent this situation from getting worse, and spiralling numbers of people in energy poverty, we need urgent action from the government.

Now is the time to make sure all households are protected through the winter months. Delaying action will exacerbate the consequences of this crisis: disconnected households will have to find money to pay reconnection fees, other debts will mount, or essential spending pushed further back. Long-term, the impact of energy poverty will take its toll on people’s physical and mental health.

For households who are facing significant arrears and acute risk of disconnection, the government must now step in and protect them through an emergency response fund. The Budget saw the Fuel Allowance extended to more people, but crucially it still misses out on low earning families on Working Family Payment.

For these households, a discretionary fund to support energy costs and debt will be vital. Suppliers must commit to keeping the lights on for vulnerable and financially insecure customers and make sure that there are flexible options available for people to address energy debts.

Government must act

The EU has published a toolkit that outlines options governments can take to protect consumers this winter. It focuses on rapid, targeted measures which would protect the most vulnerable and those at risk of energy poverty, with suggestions including vouchers and partial bill payments, temporary bill deferrals, relieving taxation from vulnerable customers’ bills, as well as measures to support suppliers. SVP urges the government to consider which of these measures would be appropriate to the Irish market.

Looking further ahead, we must see more action to bring about a just transition that includes everyone at risk of being left behind. For people in energy poverty, retrofitting offers a long-term answer to the high bills caused by inefficient and substandard housing, as well as contributing to climate action targets.

A recent joint report by SVP and Threshold outlined the need for a clear plan for the private rented sector – where tenants are more at risk of energy poverty, and yet have no course to invest in their homes and reduce bills.

If those at the highest risk of energy poverty, and who are least able to improve their housing, are not prioritised, we will see growing inequality in housing standards.

Energy is an essential service that enables us to stay warm, keep the lights on and fully participate in society. This winter, affording this everyday essential will become increasingly difficult for households on low incomes. We need to make sure the safety net is ready to protect everyone who needs it.

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Issy Petrie is Research and Policy Officer at the Society of St. Vincent de Paul.

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