What is fuel poverty and what can be done about it?
What is fuel poverty and what can be done about it?

What is fuel poverty and what can be done about it?

What is fuel poverty?

Fuel poverty refers to households who have to spend a high proportion of their household income in order to keep their home at a reasonable temperature. 

It is measured using the Low Income Low Energy Efficiency (LILEE) indicator, which considers three different elements: household income, household energy requirements, and fuel prices. A household will be considered to be fuel poor if the property they are living in has a fuel poverty energy efficiency rating of D or below and when they spend the required amount to heat their home, the residual income they are left with is below the official poverty threshold.

However, in Scotland, Wales and Northern Ireland, the definition of fuel poverty is if a household spends more than 10% of its income on fuel costs and if the remaining household income is insufficient to maintain an adequate standard of living.

Who is most affected by fuel poverty?

It is not just those deemed to be in fuel poverty that are affected. In 2020 2.6 million households in England were in the lowest two income deciles but were not considered to be in fuel poverty as their property had an energy efficiency rating of C or higher.

Being in fuel poverty can mean that people choose to reduce and ration their heating, or not heat their homes at all. This can have worrying impacts on children, the elderly, the vulnerable, the disabled and the unwell. 

The British Medical Journal reports that “children growing up in cold, damp, and mouldy homes with inadequate ventilation have higher than average rates of respiratory infections and asthma, chronic ill health, and disability. They are also more likely to experience depression, anxiety, and slower physical growth and cognitive development.” The NHS estimates that the cost of treating conditions caused or made worse by living in a cold home is £1.4 billion per year, which is rounded up to £2.5 billion per year when adults are included.

Fuel poverty facts

What can be done about fuel poverty?

There are many policies, packages, and price caps in place that aim to reduce fuel poverty. For example, vulnerable households might be able to access certain discounts to help them pay their energy bills, including Winter Fuel Payment, Warm Homes Discount, and Cold Weather Payments.

The Government has also introduced energy price caps, meaning that there is a maximum price that energy suppliers can charge consumers for the energy they use. This was introduced in October 2022 and is expected to last until April 2024.

Under the Energy Company Obligation, suppliers are required to install energy efficiency measures in fuel poor, vulnerable, or low income homes, which will include actions such as installing insulation or upgrading inefficient heating systems. This will ultimately result in much needed heating savings.

National Energy Action (NEA) is a national fuel poverty charity, working to ensure that everyone in England, Wales and Northern Ireland is warm and safe at home. They provide advice and support to people struggling to heat their homes affordably, either directly or via community engagement projects and outreach. They also campaign to ensure that the needs of fuel poor households are at the heart of policy decisions as well as undertaking research and developing accredited training and qualifications to improve standards of energy advice.

Smart home energy and money management systems can help tackle fuel poverty and make an important contribution to the country’s ambitious carbon emissions targets. A report by the Energy Saving Trust introduced SHIMMER (Smart Homes Integrating Meters Money Energy Research), a ‘unique system uses smart meters as a starting point to help fuel-poor, low-income households to manage their energy consumption and finances more efficiently’. After a successful pilot, they are undergoing redevelopment in advance of a full commercial rollout, where it will be offered to social housing providers.

How is National Housing Group helping?

As part of our Green Homes Initiative, we ensure our properties are as energy efficient as possible. Our focus is on efficiency and sustainability, and we use solar panels, low energy lighting, energy efficient heating, and radiant heating and cooling in our properties. We also ensure each property is well insulated. Not only does this lessen the environmental footprint and produce fewer carbon emissions, but it also helps to reduce fuel poverty.

Although the Government has set 2030 as the date by which energy efficiency in properties across the UK must be improved, more can and should be done sooner. If every home that is currently below the Energy Performance Certificate (EPC) band C was improved to band C today, the aggregate saving would be £10.6bn each year. Change needs to happen to help those vulnerable to fuel poverty, and it needs to be done as soon as possible, not just to meet the Government’s requirements, but to help those who desperately need to get out of fuel poverty.