Extra £225m to beat fuel poverty

Up to 100,000 households could be helped with their fuel bills under a deal agreed between the UK's big six energy companies and the government.

The energy firms have agreed to boost their collective annual spending on social assistance programmes by £225m over the next three years.

Spending will go up from £50m in the past financial year to £100m this year, £125m in 2009-10 and £150m in 2010-11.

The deal was brokered by Energy Secretary John Hutton.

'Eradicating fuel poverty'

If all the extra money was used to offset bills it could remove up to 100,000 homes from fuel poverty.

A home is judged to be in fuel poverty if 10% or more of the household income is spent on energy bills.

The big six energy firms are British Gas, E.On, Scottish Power, Scottish & Southern, EDF, and NPower.

"I do not underestimate the difficulties and anxiety that rising energy prices can cause but I believe that this extra cash, coupled with ensuring we have the most competitive market possible, will help us toward our goal of eradicating fuel poverty in the UK," said Mr Hutton.

The extra assistance will be targeted at households on low incomes who are most vulnerable to fuel poverty, including the elderly.

The government already pays winter fuel payments of up to £250 for over-60s, and up to £400 for over-80s.

Earlier this week, two charities said they were taking legal action against the government for not doing enough to help people hit by rising fuel prices.

Friends of the Earth and Help the Aged are bringing the joint legal challenge to end "the misery of fuel poverty".