Pensioners paying more money for less heat

A new report by the Institute for Fiscal Studies (IFS) has revealed that despite having increased spending on fuel by almost one third between 2004/5 and 2006/7 to meet higher bills, poorer pensioners have reduced their fuel consumption by 7%.

The report, commissioned by Age Concern and Help the Aged, which looks at pensioner spending patterns across many different categories, reveals that in 2007, the poorest fifth of pensioners needed to spend nearly 40% of their budget (after housing costs) on food and fuel, while the richest fifth spent just under 20%.

Jonathan Stearn, energy expert for Consumer Focus, commented:

‘It is shameful that vulnerable pensioners’ energy bills have gone up, despite them having to turn down their heating to cut costs. Cutting back on heating to avoid high bills could put the health of many at risk this winter.”

‘We need a radical energy efficiency scheme from the Government to protect the poorest pensioners, families and disabled people from fuel poverty. The energy companies must also do the right thing by their customers and pass on the significant wholesale energy price cuts immediately. If the suppliers don’t act then the Government must take action.’

Holidays were found to be a major area of spending for the richest group of pensioners accounting for £1 in every £8 of their budget. In contrast, poorer pensioners spent just £1 in every £30 on holidays and their largest budget items were electricity (6.5% of spending) and then meat (6.2%) out of the 56 categories that were analysed.

The report also compared pensioners’ spending patterns with that of non-pensioners. For example, the research found that in 2007 even the richest pensioners still spent less of their budget on certain luxury items compared to younger people. For example, the poorest under 35s spent more of their budget on eating out (7.8%) compared to the richest over 70s (5.7%).

Andrew Harrop, Head of Public Policy at Age Concern and Help the Aged said:

“What’s most clear from this important new research is the significant differences in living standards between older people at different ends of the income scale. Shockingly, the report finds that while poorer pensioners are spending more of their available income on energy, they are – at the same time – reducing the amount of energy they buy. Not only does this demonstrate the problem of soaring energy costs in recent times, but is a warning to policy makers and others that vulnerable older people could be putting their health at risk in winter just to cut costs.”