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Social Justice

What is fuel poverty? Everything you need to know as energy bills soar in the cost of living crisis

We breakdown how fuel poverty is calculated, its impact on people as energy bills soar in the cost of living crisis, and the solutions

Millions of people in the UK are living in fuel poverty. Many cannot afford to pay their energy bills, leaving them unable to cook a meal each night, have a hot shower or heat their homes. 

As the cost of living crisis surges through the country, the situation is only set to get worse. Liz Truss has announced that the energy price cap will be frozen at £2,500 from October – but this still means families and individuals could be paying double what they were earlier this year. 

This is what you need to know about rising energy bills and their impact on fuel poverty in the UK.

What is meant by fuel poverty?

In simple terms, fuel poverty is when a person cannot afford their energy bills, leaving them unable to cook or put on the heating. More officially, a household is defined as being in fuel poverty “if they are on a low income and face high energy costs”, according to the Department of Energy and Climate Change.

If your energy bills are above-average and paying these bills pushes you below the poverty line, you are defined as fuel poor.

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

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Household energy 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.

Earlier this year, the energy price cap was £1,277. In April, Ofgem increased the energy price cap to £1,971. That’s caused a huge spike in fuel poverty rates, as people’s income is not keeping up with the cost of living. 

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 do I know if I am in fuel poverty?

Because of the way this 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. 

It might sound like a lot of big numbers and percentages that are tricky to understand, but it’s not your responsibility to calculate if you are living in fuel poverty. In theory, the government can figure out how many fuel-poor households there are and how badly affected each household is, using their indicator. 

The government then works out the fuel poverty gap – or the amount a household would need to make up to not be classed as fuel poor. This tells them how much extra a household would need not to pay their energy bills. 

To get a sense of the problem at a national level, the government then adds up the fuel poverty gap for each individual household to produce an overall estimate.

How does fuel poverty affect people? 

An estimated 12,000 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.’”

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How many households in the UK are in fuel poverty?

An estimated 3.16 million households in England were defined as fuel poor in 2020, the most recent year for which statistics are available. This was 13.2 per cent of all households.

National Energy Action has estimated that 6.7 million UK households will be fuel poor after the price cap rise in October. That’s taking into account Liz Truss’ freeze to the energy price cap. 

According to the House of Commons library, around 13 per cent of households in England were classed as fuel poor in the latest estimates. This compares to 25 per cent in Scotland, 12 per cent in Wales, and 18 per cent in Northern Ireland.

Who is most affected by fuel poverty? 

According to the government’s statistics, ethnic minorities are more likely to struggle with fuel poverty. In the two years to March 2021, an average of 12.6 per cent of white households were in fuel poverty, compared with 19.1 per cent of households from all other ethnic groups combined

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. 

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.

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. 

Stop Mass Homelessness

Help us stop mass homelessness

Unless we act, the UK is facing a homelessness crisis 
this autumn.

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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