The Spring Budget must address rural fuel poverty

1 March 2023
Jeremy Leggett, ACRE’s Policy Advisor blogs on how many off gas grid households have been left in the cold by the government’s energy support schemes.

Most of us feel optimistic at the beginning of March. The days are longer, and spring feels close. In rural England at this time of year, however, people used to talk of the ‘hungry gap’ to come. This was the period, generally between late March and May, when winter crops and stores were coming to an end, but the spring had not yet brought forth anything new. It was characterised, quite literally, by scraping the bottom of the barrel. Perhaps it is a phrase that will come back into use in 2023.

March is also now the time the Government presents a budget for the new financial year, and in recent practice, it follows up on promises and warnings presented in the Autumn Statement. This year, there is much to follow up, especially in relation to the cost of energy.

Just before the winter cold set in the Government announced a bewildering array of measures to help people through a winter of dramatically rising energy costs. With the experience of Covid support measures in the rear-view mirror, it quickly put in place cash support for every household in the country. The headline was an energy price guarantee that would limit annual fuel costs for the typical household to £2,500, whilst giving every household a discount of £400 through their electricity supplier. This was in place and operating within a month, a feat that would probably not have been possible without the experience of the Covid support schemes. Job done, a remarkable achievement. Or was it?

The schemes were a very good example of the 80:20 rule, or perhaps more accurately the 83:17 rule.  20% of the effort gets 80% of the job done, the remaining 80% of effort is required for the rest. In this case it is people living in rural areas, living off the gas grid and, in a small number of cases, with no connection to the mains electricity at all that make up the 17%. Often these are households living in older, harder to heat and insulate, homes. Many buy their heating oil or LPG in bulk in the Autumn to see them through to the hungry months. Others, particularly those on lower incomes heat their homes with electricity as they cannot ‘front’ bulk buying fuel supplies. Many are older and on fixed incomes. For these people it was not ‘job done’; it was wait and see what happens, when and how.

The answer was too little and far, far too late. A small lump sum was offered to users of alternative fuels and this was amended, upwards, when it became unavoidably obvious that the amount was too little. Those heating with electricity were not even entitled to this.

The ‘core’ scheme gave everyone £400 through discounts to their electricity bills and a discounted rate for natural gas of £0.10 per kilowatt hour. This allowed an ‘average’ property using electricity and gas for heating, to be kept warm for £2,500 per year. The same average property in a rural area with no gas, either had to buy a winter supply of heating oil, in advance, at whatever the market offered that day, or heat with electricity at £0.34 per kilowatt hour. For the latter group, the estimated household energy cost for the same ‘average’ home is over £5,000 per year. Those living in less conventional circumstances, such as Park Homes, or not on the electricity grid, are still waiting for the £400. This has been paid in monthly increments to those with a ‘conventional’ electricity supply throughout the winter.

With the budget coming in March, we can only hope that the government will recognise and address the ‘hungry gap’ being experienced by many rural households, particularly those living off the gas grid and surviving on low incomes during a period of inflated prices. An annual budget should prepare us for the whole year ahead. Winter is, after all, a predictable event.

  • Government needs a plan to give support, in advance, to those who must buy energy well ahead of use if prices remain high next winter.
  • In the immediate short term, Government should introduce a lower price guarantee on electricity for those who have no choice but to heat their homes this way, and to maintain the current price guarantee for gas, until at least the end of May.
  • Perhaps most importantly Government should be helping more people in hard-to-insulate houses improve their energy efficiency so that less support is needed in future, and we reduce our long-term dependence on fossil fuels.

Without these we will all be left hoping, as so many generations before us have done, that the ‘hungry gap’ is accompanied by early Spring warmth.