‘Energy bill surge set to hit elderly pensioners hardest’ – LCP

New analysis of household spending patterns shows that the expected surge in household energy bills is likely to hit elderly pensioners the hardest.

Each year, the Government carries out a survey of household spending patterns in order to help construct the inflation figures. The latest ‘Living Costs and Food Survey’ provides data for 2023/24 and shows that the share of household spending going on gas, electricity and other fuel averaged around 6.5% in that year. But as Chart 1 shows, the poorest households spend twice as much of their total budget on fuel compared with the richest households (around 11% for the poorest households, compared with under 5% for the richest).

Chart 1. Share of budget going on fuel, from poorest to richest 10th of households

Source: LCP calculations based on Living Costs and Food Survey 2023/24

But amongst low income households, single elderly pensioners are likely to be especially hard hit. As well as having low incomes, they are more likely to be at home for more of the day, and may start to feel the cold more as they age. This is illustrated in Table 1, which shows how the (already high) share of spending on fuel amongst single pensioners rises with age.

Table 1. Single pensioners, share of budget going on fuel, by age

There were around 4.7m single pensioners in GB in the latest data, and DWP figures suggest that just over half of these will be widows and widowers – around 2.5m. Of these, around 1.9m are aged 75 or over and can be expected to have the highest share of spending on fuel of any group.

The Office for National Statistics has analysed the groups most at risk of ‘excess winter deaths’ and say:

“adults aged over 75 years have higher excess winter mortality than younger adults, with adults aged over 90 years having the highest winter mortality; older adults are more likely to have weaker immune systems and long-term health conditions and find it harder to stay warm when it is cold.”

Although average energy bills have declined since 2023, these figures show which groups would be most vulnerable in the event of a return to historically high energy prices.

A range of help with energy costs is available to pensioners, but some depends on claiming relevant benefits.

Help includes:

• Winter Fuel Payments of up to £300, for those with individual income under £35,000;
• ‘Warm Home Discount’ payments of £150 towards the energy bills of pensioners on the Guarantee Credit element of Pension Credit and others on low incomes;
• ‘Cold Weather Payments’ of £25 per week to those on benefit when local temperatures are below freezing for 7 consecutive days

Commenting, Steve Webb, Partner at LCP, said:

“Older and poorer pensioners will be hardest hit if energy prices spike. It is vitally important that this group is supported to claim the existing help that is available with energy bills, but much more will need to be done if the cost of home heating jumps. It is essential that extra help does not require a complex claims process, as many vulnerable people may miss out.”