About Fuel Poverty

Definition of fuel poverty

The Government defines fuel poverty as the need to spend more than 10% of household income to achieve adequate levels of warmth in the home and meet their other energy needs. Adequate warmth is defined as 21oC/23oC in the main living areas and 18oC in other areas.

‘Affordable warmth’ is often regarded as the reverse of fuel poverty, i.e. it describes the situation in which households do not need to spend more than 10% of income to achieve adequate warmth. However, the affordability of running appliances is also an important consideration. This is because appliances account for a growing proportion of households’ energy budgets and because low income households tend to use older and more inefficient appliances.

Causes of fuel poverty

The three key factors that contribute to fuel poverty are:
• Low household income
• Poor energy efficiency of the property and heating systems and appliances within
• Fuel price

‘Under-occupation’ is also sometimes referred to as a fourth contributory cause. This refers to households living in properties considered larger than their requirements. This is not generally considered an issue when households have sufficient income to heat their homes but is considered an issue for lower income households.

Fuel poverty targets

The Government and Devolved Administrations are committed by legislation to eradicate fuel poverty by 2016/18. The “UK Fuel Poverty Strategy” (2001) sets out the Government and Devolved Administrations’ plans for meeting these targets. The Government and Devolved Administrations have also agreed a number of interim targets:
• to eliminate fuel poverty among vulnerable groups by 2010 (England, Northern Ireland)
• to achieve a 30% reduction in fuel poverty by 2006, based on the 2002 Scottish House Condition Survey (Scotland)
• to assist 95,000 households through the Home Energy Efficiency Scheme by March 2007 (Wales).

The Government regards energy efficiency as central to achieving its fuel poverty targets.

Progress on targets

Although the Government’s fuel poverty targets are challenging, it initially appeared that the programmes put in place to meet them were sufficient. However, the substantial rise in fuel prices since 2003 has called this into question. The Government’s Energy Review suggests that between 700,000 and 2.1m vulnerable households will remain in fuel poverty in England by 2010, unless the Government introduces a major new policy intervention beyond existing programmes.

Ideally, such an intervention should address the three main factors that determine levels of fuel poverty, that is energy efficiency, fuel price and income. The Government’s report of the Energy Review states that it is initially going to prioritise provision towards single pensioners over 70 on Pension Credit. It also refers to exploring the provision of new technologies (e.g. biomass and heat pumps) for fuel poor households living in ‘hard to treat’ properties: those off the gas network and/or built with solid walls.

Characteristics of fuel poor households

Fuel poor households are not a homogenous group. It is therefore sometimes necessary to consider the particular needs of specific groups within the ‘fuel poverty population’. There are a number of ways in which different sub-groups can be identified:

• by household type – the Government refers to:
- ‘vulnerable households’: older households, families with young children (particularly lone parents) and disabled households on low incomes.
- ‘non vulnerable or healthy adult’ households: single or couple working age households on low incomes with no children and who are not disabled .
- households from minority ethnic groups are also more likely to live in fuel poverty
• by fuel consumption:
- households that ration fuel use and therefore prone to cold and/or damp homes (more common among moderate/low income older households)
- households that consume adequate amounts of fuel but either go into fuel debt or cut back on other essential necessities (more common among low income families)
- households that both ration fuel use and cut back on other essential necessities (more common among very low income older households)
• by property characteristics
- low income households living in properties with adequate energy efficiency standards (some of these may still live in fuel poverty in which case non energy efficiency interventions are required, e.g. income measures)
- low income households living in properties that can be cost effectively improved to adequate energy efficiency standards, e.g. SAP (Standard Assessment Procedure) 65
- low income households living in properties that are difficult to improve cost effectively (‘hard to treat’), i.e. off-gas, solid walled, non traditional construction
• by fuel tariff ( use of more expensive fuel payment methods):
- prepayment meter (less common among older households, more common among low income families and working age single households)
- frequent cash payment (more common among older households)
- many low income fuel consumers have also not switched fuel supplier and therefore benefited from the lower prices on offer.

Many people on low incomes and/or in fuel poverty have low levels of literacy and numeracy or do not speak English as their first language. Many prefer to receive information face to face, rather than through written communications or over the telephone.

Further information and resources

Definition of fuel poverty
The “Peer Review on the methodology for calculating Fuel Poverty figures for England” (2005) provides an in-depth discussion of various issues relating to the definition of fuel poverty. See: www.dti.gov.uk/energy/fuel-poverty/methodology-review/index.html

Fuel poverty policy and targets
The “UK Fuel Poverty Strategy” (2001) and annual progress reports can be found at: www.dti.gov.uk/energy/fuelpoverty/strategy/index.html. The progress reports tend to provide more detailed information on England.
The “Scottish Fuel Poverty Statement” (2002) gives detailed information on the Scottish Executive’s strategy to eradicate fuel poverty: www.scotland.gov.uk/Publications/2002/08/15258/9962
The “Scottish House Condition Survey 2003-2004” (2005) includes data on the number of households in fuel poverty in Scotland. See: www.shcs.gov.uk
“Showing the range of benefits resulting from the Central Heating and Warm Deal Programmes” (2004) is a detailed evaluation of the main fuel poverty programmes in Scotland. See: www.scotland.gov.uk/Publications/2005/03/20794/54043
“Ending fuel poverty: a strategy for Northern Ireland” (2004) gives detailed information on fuel poverty programmes in Northern Ireland. See: http://www.dsdni.gov.uk/ending_fuel_poverty_-_a_strategy_for_ni.pdf
The “Northern Ireland Interim House Condition Survey 2004” (2006) includes data on the number of households in fuel poverty in Northern Ireland. The document will be posted on the Northern Ireland Housing Executive’s website in the near future. See: http://www.nihe.gov.uk/HCS.
“A fuel poverty commitment for Wales” (2001) gives detailed information on fuel poverty programmes in Wales. The document will be posted on the Welsh Assembly Government’s website in the near future. See: http://new.wales.gov.uk/topics/housingandcommunity/
housing/energyandfuel/?lang=en
“Fuel poverty in Wales” (2005) gives detailed data on the number of households in fuel poverty in Wales for 1997/98. See: http://new.wales.gov.uk/docrepos/40382/sjr/research/
hrr0305e?lang=en
Headline data on the number of households in fuel poverty in Wales is included in the “UK Fuel Poverty Strategy: 4th annual progress report 2006”. See: www.dti.gov.uk/energy/fuelpoverty/strategy/index.html.

The Welsh Assembly Government intends to publish more detailed data in the near future, based on an analysis of the 2004 ‘Living in Wales’ survey.
The NEA 2004 report, “Fuel Poverty: the state of the nations. Report of the UK Fuel Poverty Monitor“, provides a useful comparative analysis of fuel poverty programmes in the different UK countries. See: http://www.nea.org.uk/downloads/publications/
state_of_the_nation.pdf


Characteristics of fuel poor households

“Detailed breakdowns of fuel poverty in England in 2004, version 1, April 2006” provides detailed information on the extent of fuel poverty among different household types in England in 2004. See: www.dti.gov.uk/files/file29687.pdf
“Fuel poverty in Wales” (2005) gives detailed breakdowns of the extent of fuel poverty among different household groups in Wales for 1998/98: http://new.wales.gov.uk/docrepos/40382/sjr/research/
hrr0305e?lang=en
Ofgem’s quarterly “Social Action Plan Indicators” gives detailed breakdowns of households changing fuel company (regarded as a measure of competition). See: http://www.ofgem.gov.uk/temp/ofgem/cache/cmsattach/
14238_sapq4.pdf


Other useful references

The Government’s “Report of the energy review” (2006) includes some new proposals for combating fuel poverty, in recognition of the recent increase in fuel poverty levels due to rising fuel prices. See: http://www.dti.gov.uk/files/file31890.pdf.
The National Energy Action website is worth checking on a regular basis. It includes policy and research, guidance (e.g. to local authorities, PCTs), demonstration projects (e.g. micro-generation/renewables), training, Warm Zone information. See: www.nea.org.uk.
The CSE/Bristol University “fuel poverty indicator” provides modelled data on the incidence of fuel poverty at ward level for England. The current version uses fairly old data; however, DTI and others have funded CSE to update the indicator with 2003 EHCS data. See www.cse.org.uk/fuelpovertyindicator.
The CSE “rural fuel poverty website” provides maps and data on properties off the gas network, solid wall properties and Warm Front data at Output Area level for England. See: www.ruralfuelpoverty.org.uk. CSE is developing a similar resource for Wales.
The ACE “fuel prophet” model provides a guide to the cost effectiveness of a range of energy efficiency measures for reducing fuel bills, particularly in ‘hard to treat’ properties, including under different price rise scenarios. See: www.ukace.org/research/fuelprophet/about.htm
And don’t forget to regularly check the websites of the EEPfH Fuel Poverty Strategy Group and its two sub-groups (hard to treat and health). The EEPfH also funds the ‘Health Housing and Fuel Poverty Forum’ and its associated website: www.warmerhealthyhomes.org.uk. This provides extensive information on the links between fuel poverty and ill health and practical resources for cross-sectoral action to combat the problems.

 

Source: William Baker, Centre for Sustainable Energy.

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