The cold winter is closing in and for many people that means only one thing – a hike in energy bills. Keeping the home heated can be costly and the price of fuel has seen significant increases over the years. The outlook is grim, with many households caught in the vicious cycle of fuel poverty.
‘Fuel poverty’ is defined as a household that spends 10% of their income on keeping the home in a ‘satisfactory’ condition. There are three main factors which determine whether a household is classed as being in fuel poverty: the cost of energy, the energy efficiency of the property and household income.
The government recently announced that unemployment in the UK has reached a 17year high, so it can be assumed that high levels of unemployment have affected average household income. Together with increasing fuel costs, people are forced to search for extra cash to cover the costs, largely through obtaining credit.
In 2009, over 4million households were classed as being in fuel poverty, and the figure has increased substantially since. Obtaining more credit is the only way that some people can afford to keep up with the rising energy costs, and this means that people are being driven into debt. It’s a downward spiral that is affecting all too many people.
IVAs are becoming an increasingly popular choice for households who can’t keep up with debt repayments. Such measures are a great way to deal with the affordability crisis that has stricken the nation as monthly repayments can be reduced, interest rates are frozen and any outstanding debt can be written off after five years or less.
