What is fuel poverty?
Fuel poverty is type of deprivation and financial difficulty suffered by households in which they can't afford to heat their homes to an adequate standard without incurring costs beyond what they can afford.
In This Guide:
- Definitions of fuel poverty
- Fuel poverty statistics
- Factors that impact fuel poverty
- Relief for fuel poverty
Definitions of fuel poverty
Traditionally, a household was considered to be fuel poor' if it had to spend more than 10% of its income on energy costs to heat its living spaces to an adequate standard (with adequate' defined as 21°C in the main living room and 18°C in other occupied rooms).
That's still the definition used in Northern Ireland, Scotland, and Wales, but fuel poverty' was redefined for England by the government in 2013.
England now has a low income high cost' model of fuel poverty. Under its terms, a house experiences fuel poverty if the amount of money they would need to spend to keep their home at a reasonable temperature is above the national median level and if they spent that amount, their residual income would place them below the poverty line.
Both definitions of fuel allow for the measurement of a household's fuel poverty gap-the difference between a home's average energy bill and what it would have to be for the home to no longer be fuel poor. In this way, the government can measure not only the prevalence of fuel poverty, but also its depth.
However, the low income high cost' indicator for fuel poverty used in England has been criticised for failing to reflect the rise in fuel costs over the last decade, as it a relative measure. Technically, the prevalence of fuel poverty of England has remained flat, despite increased energy bills, while it has increased in the devolved nations.
The low income high cost' model is very likely to hide the extent of fuel poverty in England: the extent to which families are scrimping and saving to heat their homes, worrying about bills, and even coping with dangerously cold rooms.
Fuel poverty statistics
In 2016, the last year for which data is available, 2.55 million households in England were fuel poor-11.1% of all households, up from 11% in 2015.
The average fuel poverty gap in England was £326, a decrease of 4.4% in real terms since 2015.
The aggregate fuel poverty gap in England was £832 million in 2016.
However, rising fuel prices has led the Department for Business, Energy, and Industrial Strategy (BEIS) to forecast a 9% rise in the average fuel poverty gap from 2016 to 2018-from £326 to £357.
In Scotland, which uses the 10% of income definition for fuel poverty, 649,000 households (26.5% of the total) experienced fuel poverty in 2016.
In Wales in 2016, 291,000 households faced fuel poverty, 23% of all households.
In Northern Ireland in 2016, 160,000 households were fuel poor, 22% of all households.
Factors that impact fuel poverty
Whether a household experiences fuel poverty comes down to a combination of factors: income, energy costs, and home efficiency. Typically, fuel poor household have lower incomes, higher energy bills, and less efficient homes than households which aren't fuel poor.
The median income of fuel poor households in England was £10,325, less than half the national median of £22,0017 and much less than the £24,050 median income of households that weren't fuel poor.
Fuel poor households were also more likely to be paying over the odds for their energy, with median bills of £1,366, compared to the national median of £1,177 and the median of £1,140 paid by non-fuel poor households. Consumer groups have also found that low income households are among the least likely to compare energy tariffs and switch to the cheapest on the market, often due to lack of consumer confidence or understanding of the energy market. They're also more likely to be living in inefficient and badly insulated homes and unable to find the money to invest in efficiency improvements which can deliver future savings on bills.
energy efficiency of homes:
Fuel poor households are more likely than non-fuel poor households to be living in energy inefficient homes, driving up their fuel bills. The government rates homes according to the Fuel Poverty Energy Efficiency Rating (FPEER) system, which mostly reflects the Standard Assessment Procedure (SAP), accounting for how well the property has been insulated and the efficiency of and control over its heating system, among other factors. It gives homes ratings from A to G, with A-rated homes being the most efficient. Half of all fuel poor homes in England were in Band D and just 7.7% were in Band C and above. The band of household also correlated to the depth of its fuel poverty: homes in Band G-the least energy efficient-had an average fuel poverty gap of £1,482, compared to a gap of just £185 for fuel poor households in Band B properties. Statistics show that efficiency improvements like new insulation can reduce poverty. Homes with insulated cavity walls were the least likely to be in fuel poverty (7.6% of homes) while those with uninsulated solid walls were the most likely to be in fuel poverty (16.8% of homes). However, fuel poor homes are unlikely to be able to find the thousands of pounds required to install wall insulation.
Some relief schemes exist for those experiencing fuel poverty, as detailed below.
Relief for fuel poverty
Winter fuel payments
Those born on or before 5 November 1953 can receive between £100 and £300 to help with their energy bills through the winter fuel payments scheme. Eligible Britons who receive a social security benefit, including state pensions, should receive the benefit automatically, but other eligible households will have to claim it.
Cold weather payment
Under the Cold Weather Payment scheme, those on certain benefits will receive £25 if the average temperature in their area is recorded or, or forecast to be zero degrees celsius for seven consecutive days. The scheme applies to any week-long col period between 1 November and 31 March.
Warm home discount scheme
Eligible households can receive a one-time £140 discount on their energy bills each year. The money isn't paid directly to you but is rather automatically deducted from your electricity bill sometime between September and March. You'll need to be receiving certain benefits and have an energy tariff with an eligible supplier to qualify.
Find other savings
Not all energy efficiency improvements require thousands of pounds of investment. A draught excluder for a chimney costs just £20 and can trim £15 a year from your energy bills. Blocking draughts around windows and doors can cut another £20 and for minimal outlay.
And you can reduce costs for free by being more conscious of your energy use, turning off lights in rooms you're not using, shutting off radiator valves in bedrooms during the day, turning down the temperature on your washing machine, and using a drying rack rather than a tumble dryer.
Households are also encouraged compare energy prices and switch to cheaper tariffs, with savings of up to £300 a year available for switchers.
Types of Tariff
The cheapest gas and electricity tariffs tend to be standard fixed rate deals. However, households in fuel poverty will often be put on prepyament plans - especially if they've missed payments on bills in the past. If you are able to switch to a fixed rate credit tariff, it's advisable to do so.