Fuel Poverty

Fuel poverty is a devolved policy area, and is defined and measured differently in different parts of the UK.

In general, fuel poverty relates to households that must spend a high proportion of their household income to keep their home at a reasonable temperature. Fuel poverty is affected by three key factors: a household’s income, their fuel costs, and their energy consumption (which in turn can be affected by the energy efficiency of the dwelling).

Fuel poverty rates vary across the nations of the UK and cannot be directly compared due to differences in methodology. In the latest estimates, around 10% of households in England were classed as fuel poor, 24% in Scotland, 12% in Wales, and 18% in Northern Ireland. In all nations, fuel poverty rates have either been relatively stable, or falling in recent years (though a lack of data in some areas makes identifying trends challenging).

There are both national, and devolved policies for addressing the different drivers of fuel poverty. Fuel poverty can be alleviated by improving a households income (and their ability to pay bills), reducing their fuel costs, and reducing their energy consumption (by improving energy efficiency). To improve a households ability to pay, there are UK wide payments and discounts available to certain eligible customers known as the Winter Fuel Payment, Warm Homes Discount, and Cold Weather payments, designed to help potentially vulnerable customers more easily pay their bills. To reduce fuel costs, the UK Government have introduced an energy tariff cap, though switching supplier can still lead to lower tariffs. Energy efficiency is supported through the Energy Company Obligation, which requires energy suppliers to install insulation or new heating systems in fuel poor, vulnerable or low income homes. Each nation also has its own schemes to alleviate fuel poverty, including the new Green Homes Grant in England.

Several stakeholders have recommended the UK Government do more on fuel povety, pointing to wider potential benefits such as for health from avoiding cold homes, and decarbonisation from more energy efficient homes. The 2019 Conservative Party Manifesto included new energy efficiency funding commitments, and the Government has said it will produce a new fuel poverty strategy for England in 2020. A new fuel poverty strategy is also expected in Scotland, with a draft published in 2018, Wales are consulting on a new strategy for publication in 2021, and Northern Ireland is also expected to update its strategy.

The Covid-19 pandemic has caused widespread financial hardship. Many consumer groups argue that the pandemic is worsening fuel poverty and more needs to be done. Various policies from the UK and devolved Government have intended to help households financially through the pandemic, including with specific support for energy bills. However some policies, such the roll-out of smart meters and the publication of new fuel poverty strategies, have been delayed by the pandemic.