Fuel Poverty

This Library briefing note summarises the levels of fuel poverty across the UK, policies to address fuel poverty, and stakeholder comment on the issue.

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 11% of households in England were classed as fuel poor, 25% 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. The devolved nations also have their own schemes to alleviate fuel poverty.

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 in 2020, with a draft published in 2018, and Wales and Northern Ireland are also expected to update their strategies.