Fuel Poverty

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What is Fuel Poverty?

A household is said to be in fuel poverty if it needs to spend more than 10% of its income on fuel to maintain a satisfactory heating regime (usually 21 degrees for the main living area, and 18 degrees for other occupied rooms).

The “Fuel poverty ratio” is therefore defined as:

Fuel poverty ratio = fuel costs (usage x price) ÷ income

In the calculation of this ratio, the fuel usage is modelled, to ensure the household achieves the satisfactory heating regime. Therefore, if the dwelling is actually heated to a temperature below the level defined as being satisfactory, the estimated bill for that household will be higher than the actual bill and vice versa.

In addition to space heating, the fuel costs component also includes modelled spending on energy for water heating, lights and appliances and cooking.

Whether a household is in fuel poverty or not is determined by the interaction of a number of factors, but three specifically stand out. These are:

  • The energy efficiency status of the property
  • The cost of energy
  • Household income

The Fuel Poverty Strategy

Since the publication of the UK fuel poverty strategy: November 2001, a great deal has been achieved. The Government’s framework provides a strong safety net for vulnerable people, and was successful in reducing fuel poverty in the UK between 1996 and 2006 by around 2¼ million vulnerable households (one that contains children, the elderly or somebody who is disabled).. However, rising energy prices in recent years have inevitably had an impact, and the UK fuel poverty strategy: 6th annual progress report 2008 shows that 2006 was the second consecutive year in which the number of fuel poor households in the UK rose. In 2006, there were approximately 3½ million households in fuel poverty, an increase of around 1m households since 2005.

Fuel poverty schemes have seen investment of over £20 billion since 2000, including £2 billion per year on Winter Fuel Payments. Local Authorities and housing associations continue to invest in housing to bring it in line with the Decent Homes Standard. Between 2001 and 2007, over 910,000 local authority dwellings have received work to improve their central heating, and over 750,000 local authority dwellings have received work to improve their insulation under the Decent Homes programme or as part of wider local authority work to update the stock. Energy suppliers have continued their significant activity through the first and second phase of the Energy Efficiency Commitment and now with the third phase, under the Carbon Emissions Reduction Target (CERT).

In September 2008, the Government announced a new package of measures to help people with their gas and electricity bills. The launch of the Home Energy Saving Programme, will offer energy efficiency and other measures to households in deprived areas and will be funded by energy suppliers and electricity generators. Suppliers will also fund a 20% expansion in CERT, and increase their collective spend on social programmes to £225million over the next three years. More information on the new package can be found on the Number10: Home Energy Savings Programme webpage.

To tackle fuel poverty, the UK Government and Devolved Administrations believe that no single measure is sufficient. The 2008 Fuel Poverty Annual Report updates progress on the range of programmes and measures that have been put in place. This includes:

  • Programmes to improve energy efficiency
  • Focus on fuel bills, ensuring fair treatment for the less well off, and supporting industry initiatives to combat fuel poverty
  • Continuing action to tackle poverty and increase incomes
  • New measures announced in September 2008

The 2006 Fuel Poverty dataset is now available on the UK Fuel Poverty Strategy and Annual Monitoring web page and contains the underlying data to the 6th Fuel Poverty Annual Progress Report 2008.

To request your copy, contact bre on: 01923 664114 or email: fuelpoverty@bre.co.uk.