What is the definition of fuel poverty? And how is it calculated?
The government considers a person to be fuel poor if their home cannot be kept warm at a reasonable cost without bringing their residual income below the poverty threshold.
Because of the way fuel poverty is calculated, fuel poor households might include those who aren’t traditionally considered poor, but are pushed into fuel poverty by their high energy requirements. Others who have relatively low incomes might also have lower energy costs and not be considered fuel poor.
A household is considered by the government to be in fuel poverty if they meet both of the following requirements
- They are living in a property with a fuel poverty energy efficiency rating of band D or below
- When they spend the required amount to heat their home, they are left with a residual income below the poverty line (people are considered to be in poverty if their household income is 60 per cent lower than the median across the UK)
This is known as the Low Income Low Energy Efficiency (LILEE) indicator and is used in England to calculate fuel poverty rates.
If your home has a fuel poverty energy efficiency rating of band D or below, and your income falls below the poverty line, you are classified as ‘fuel poor’ according to the government’s indicator.
With energy bills too high for them to afford, fuel poor households are left unable to turn on their heating in the depths of winter or to cook hot meals.
In England, a property with an energy efficiency rating of C or better cannot be defined as being in fuel poverty, regardless of their income or the level of energy prices.
But campaigners have criticised the government’s definition of fuel poverty. Connor Schwatz, warm homes campaigner at Friends of the Earth, said: “The government’s narrow definition of fuel poverty is farcical because it discounts anyone living in a reasonably well insulated home.
“With bills as unprecedentedly high as they have been in the last year, even many of those in better insulated homes have had to make the impossible choice between heating and eating.”
NEA defines fuel poverty instead as “low-income households spending more than 10 per cent of their income on their energy bills”. By this definition, millions more people are living in fuel poverty.
By the government’s definition, energy rebates like the warm home discount are treated as if they improve the energy efficiency of a dwelling. This reduces the number of people officially deemed to be in fuel poverty, without the added benefits of reducing greenhouse gas emissions on their property.
How many households in the UK are in fuel poverty?
According to the government’s statistics, 3.26 million households in England were living in fuel poverty in 2022. This was 13.4 per cent of all households. This is set to increase to 3.53 million people in 2023, which is 14.4 per cent of all households.
But other estimates go further. The NEA defines fuel poverty as affecting households who spend more than 10 per cent of their income on energy bills (after housing costs). There were 7.39 million households who were living in fuel poverty by this description in 2022, according to the government’s own statistics.
NEA estimates that 8.4 million people will be living in fuel poverty by this definition after the energy bills price hike in April.
Who is most at risk of fuel poverty?
Fuel poverty impacts some groups of people more than others. National Energy Action reports that 5.9 million low-income and financially vulnerable households will be in fuel poverty from April, as well as 1.8 million carers, 3.6 million people with a disability and 1.6 million in off-gas homes.
According to the government’s statistics, ethnic minorities are more likely to struggle with fuel poverty. A total of 20.3 per cent of ethnic minority households were living in fuel poverty in 2022, compared with 12.4 per cent of white households. Some areas are more affected than others. People living in the poorest and coldest regions of the UK are likely to be the worst affected by growing fuel poverty rates along with those who are already most likely to be struggling with the cost of living.
The West Midlands had the highest rate of fuel poverty at 19.2 per cent, compared to 8.6 per cent in the South East. Northern regions tend to have lower than average incomes, while southern regions outside London tend to have the largest floor areas.
Households living in rural areas have the highest fuel poverty rate of 15.9 per cent in 2022. This is partly because 56.8 per cent of households are off the gas grid and can’t access mains gas, compared with just 9 per cent in urban properties.
Households using a prepayment electricity meter were more likely to be fuel poor, with 38 per cent affected compared with 11 per cent for households paying by direct debit.
The highest level of fuel poverty was in the private rented sector with 24.1 per cent. People living in social housing, although more likely to be on a low income, are less likely to fit into the government’s definition of “fuel poor”. This is because the social housing sector has the highest share of band A-C homes (69.5 per cent). In the private rented sector, it’s just 29.3 per cent.
Properties with uninsulated solid walls had the highest rate of fuel poverty (22.8 per cent of households).
Older people are also more likely to suffer from fuel poverty. Age UK says retired households have the highest average fuel costs compared to those of other ages. Academics at the University of York found more than 90 per cent of large families and pensioner couples will be in fuel poverty by January 2023.
But young people are also struggling. The government’s statistics show one in four households (25 per cent) where the oldest person is under 25 are living in fuel poverty.
What causes fuel poverty?
The key factors that contribute to fuel poverty are the energy efficiency of a home, the cost of energy bills, and household income, according to anti-poverty charity Turn2us.
Soaring household energy bills are a big factor in the increasing numbers of people living in fuel poverty in the UK.
Bills increased by 54 per cent in April 2022, a record increase as regulator Ofgem increased the energy price cap. The monthly rise in both gas and electricity prices were by far the largest recorded since 1988.
When she was prime minister, Liz Truss announced an energy price guarantee of £2,500 from October, meaning families and individuals were paying double what they were earlier this year. Jeremy Hunt has confirmed the price guarantee will be rising to £3,000 in April 2023.
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Many people live in draughty homes and rely on heating systems that are old and inefficient. The heat escapes even when turned up to full, making it harder to bring down the total cost of bills.
Others face hardship because their income is low, or because they can’t rely on regular work. People might also feel unsupported by the welfare system and struggle to access universal credit, which can have an impact on whether they can afford energy.
Those who find themselves in this situation might feel forced to prioritise buying food or other essentials and sacrifice energy bills.
How does fuel poverty affect people?
An estimated 10,000 people die each year from health conditions arising or worsening from having a cold home, according to National Energy Action, which campaigns to end fuel poverty.
Fuel poverty can cause respiratory infections and bronchitis, stress on the cardiovascular system, make asthma symptoms worse or cause asthma to develop, and contribute to mental health struggles. That’s according to charity Friends of the Earth.
Amid a cost of living crisis, families face a sharp spike in energy costs, meaning those who have old gas boilers or cookers may not be able to afford to cook a hot meal or have a hot shower.
It’s no longer a choice between heating or eating – many vulnerable people living in the UK can’t afford either and are relying on charities to survive.
Pensioner Elaine told the Big Issue she has not put on the heating in her home for three years because she can’t afford her bills. “I don’t have anything now to live on,” Elaine said. “I have no money. The cost is going up and up, and I know I won’t be able to pay for the electricity, so I’m going to have to get lights with batteries.”
Food bank manager Charlotte Write wrote in the Big Issue: “Since the cost of living crisis has accelerated, items like instant noodles (which only require a kettle) or no-cook items like corned beef and spam have become much more popular.
“As guest Heidi says: ‘I have £1 left on the electric for the rest of the week. I need this to charge my girls’ tablets so they can do their school homework, I can’t put the oven on as well.’”
Where to get help if you can’t afford your energy bills
There is help out there for people facing fuel poverty (and those who just can’t afford to pay their energy bills). This might come in the form of benefits and support from the government. For example, some people qualify for the Winter Fuel Payment to help them pay their heating bills. This is a one-off payment made to households that include someone over pension age.
You can also get charitable grants if you need extra financial support, and your energy supplier can offer help to people who need it.
Find out more about where to get help to pay your energy bills here, from government support to grants and discounts.
How do we tackle fuel poverty?
As we face a cost of living crisis, campaigners are calling on the government to tackle fuel poverty by making homes more energy efficient, introducing a windfall tax on big energy companies, and providing additional support to people on low incomes.
Fuel Poverty Action is campaigning for ‘Energy for All’ – they want a more effective windfall tax, and an end to the huge subsidies going to oil and gas producers, traders and suppliers, and higher prices for people who use much more energy than they need.
Simon Francis, End Fuel Poverty Coalition Co-ordinator, said: “While we need emergency financial support to help the most vulnerable stay warm this winter, we also need the government to invest in long term solutions to fuel poverty. This includes additional support for energy efficiency measures, investment in renewables and weaning the nation of volatile fossil fuels which are at the heart of how we got into this mess in the first place.”
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