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Fuel poverty in the UK: The causes, figures and solutions

There were approximately 2.4 million households considered to be in fuel poverty in 2018, we explain what you need to know about the crisis affecting the most vulnerable
Flickr/Richard Gillin

As winter approaches, some of the most vulnerable people living with fuel poverty will struggle to keep their homes warm. 

National Energy Action, which campaigns to end fuel poverty, estimates 12,000 people die each year from health conditions arising or worsening from having a cold home.

And older people are among those most likely to suffer from. Age UK says retired households have the highest average fuel costs compared to those of other ages. 

Now the Covid-19 pandemic has trashed the economy, leading to rising unemployment and a flatlining growth in many sectors. The coming months could be devastating for those already struggling, according to the NEA, as the cold weather and economic turmoil place added pressure on people already struggling.

Adam Scorer, the charity’s chief executive, said this was “far from being a normal winter”. 

“The pandemic has hit household incomes and confined people to cold, unhealthy homes. People are spending more time in homes that they can’t afford to heat, using more energy, paying more and owing more for it, all the while earning less,” he said. 

This is what you need to know about issue in the UK. 

How many households in the UK are in fuel poverty? 

There were approximately 2.4 million households considered to be in fuel poverty in 2018, the latest figures according to the 2020 Annual Fuel Poverty Statistics in England.

Rates vary across the UK, however, and cannot be directly compared due to differences in methodology, but the average fuel poverty gap was estimated at £334 in 2018, a slight increase from £328 in 2017, suggesting costs are increasing. 

According to the House of Commons library, around 10 per cent of households in England were classed as fuel poor in the latest estimates. This compares to 24 per cent in Scotland, 12 per cent in Wales, and 18 per cent in Northern Ireland.

However, this was before the Covid-19 pandemic, which could increase the strain on households and see more considered “fuel poor”. Experts have warned thousands on middle incomes are at risk of “falling through the cracks” of Universal Credit after losing their jobs or seeing their wages slashed. 

What causes fuel poverty? 

According to anti-poverty charity Turn2us, a, the key factors that contribute to fuel poverty are the energy efficiency of a home, the cost of energy bills, and household income. 

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 is fuel poverty calculated? 

A household is considered by the Government to be in fuel poverty if: 

  • They have required fuel costs that are above the average median level
  • Were they to spend this amount, they would be left with a remaining income that puts them below the poverty line

This is known as the Low Income High Costs (LIHC) indicator and, according to the Government, measures “not only the extent of the problem but also the depth of the problem”.

This means, in theory, the Government can figure out how many fuel-poor households there are and how badly affected each household is. 

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.

The Government says a household’s fuel poverty status depends on the “interaction” of three things: Energy efficiency, energy prices and incomes.  

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.

Tackling the problem

So, how do we tackle fuel poverty? Some 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. 

But MP’s have warned this must be extended to prevent “the worst fuel poverty crisis in a generation”.

Campaigners are calling for the payment to be made available to all families receiving universal credit during the pandemic. 

From December, suppliers will be required to offer support to customers struggling to pay their bills after an Ofgem ruling

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, told The Big Issue in October this would “undoubtedly help” but more significant fuel poverty debt relief was needed. 

Older people are also more likely to suffer from digital exclusion, finding it hard to switch services online and bring energy costs down. Many say regulation is needed to make this easier. 

The leading National Energy Action charity says fuel poverty is “not inevitable”. They add that “the same systems that created the problem can be reshaped to build a society where everyone gets to live in a warm home. 

They are calling for the welfare system to be “redesigned” to release more people from the “grip of poverty”. 

The Charity also says more generous financial support is needed for struggling households to improve the insulation of their homes and make it “easier and cheaper” to heat them. 

“In the short-term millions will need help with the costs of heating this winter. They will need protecting from excessive fuel debt and they will need to know where to turn for help,” Scorer added.

“But we have to stop spending time, money and energy coping with the fallout of cold, unhealthy homes.  In the longer term, we have to stop talking about making homes better insulated and more efficient and just get on and do it.”

Finally, the charity adds people can help support the fight to end fuel poverty by signposting support in their local area or engaging with their MP to raise awareness. 

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