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London fuel poverty up by a fifth

More than half a million households in the capital are in fuel poverty, report says.

One fifth of London households are in fuel poverty -- defined as spending more than 10 per cent of household income on fuel for heating and domestic needs -- and that number is on the rise, a report out today warns.

The London Assembly's report In from the cold? Tackling fuel poverty in London says fuel prices rising faster than incomes are causing Londoners to spend higher percentages of income on fuel, and are causing thousands of additional winter deaths each year.

During the winter months of 2011, 2,500 more people died in London than during the 2010 winter months. Cold homes can contribute to heart attacks and pneumonia, and cost the NHS an estimated £859m annually, the report says.

Health and Public Services committee chair Victoria Borwick AM wrote, in her foreword to report:

Fuel poverty is not just a numerical formula: living in fuel poverty means being cold. While the rest of us watch the weather forecast and can turn up the thermostat, this is not the case for thousands of homes across London. Fuel poverty affects the most vulnerable, often the elderly and those who are already having difficulty making ends meet... Eat or heat is the choice for many, and for those whose homes are also in poor repair with damp seeping through, health can also be affected, and long term debilitating conditions exacerbated.

In 2008, 472,000 London households were in fuel poverty. That number rose by 19 per cent to 560,000 in 2009, and today's report says the number has since risen.

Of the London households in fuel poverty today, an estimated 126,400 are in severe fuel poverty, or spending more than 20 per cent of household income on heating and domestic fuel needs.

The report recommends energy companies provide funding for energy efficiency programmes, which can help households get loft insulation and provide additional support for those in fuel poverty. The report also calls for targets for future government funding of such programmes.

Each year from 2004 to 2009, domestic energy prices rose faster than the Retail Prices Index (RPI). Over that period, fuel prices rose 90 per cent against an RPI rise of 15 per cent.

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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.