Documents to download

February 2024 update

The latest update of this briefing paper covers the statistical content only (most of section 2)

The rest of the paper has not been updated since July 2021 and reflects policy at that time. The policy content will be updated at a later date

What is fuel poverty?

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 is affected by the energy efficiency of the dwelling).

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

How does fuel poverty vary across the UK?

The rapid increases in energy prices from late 2021 onwards led to higher energy debt, more customers on prepayment meters ‘self-disconnecting’ and others having to drastically cut their energy usage. This, along with wider cost of living pressures, have all led to heightened concerns about the extent and severity of fuel poverty and its impact on people.

rapid energy price rises during the ‘energy crisis’ are those for England. Here the definition of fuel poverty is not at all sensitive to changes in energy prices and showed no real change in 2022 or 2023. This is in stark contrast to estimates published by charities working in the sector which show large increases in 2022 and 2023. Estimates for Scotland, Wales and Northern Ireland have not yet been published for 2022.

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 13% of households in England were classed as fuel poor, 20% in Scotland, 14% in Wales, and 24% in Northern Ireland. In all nations, fuel poverty rates have either been relatively stable in recent years (though a lack of data in some areas makes identifying trends challenging).

Charts titled "Trends in fuel poverty within the UK using each country's own definition". Showing trends, where available between 2004 and 2024. 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 13% of households in England were classed as fuel poor, 20% in Scotland, 14% in Wales, and 24% in Northern Ireland.

Fuel poverty projections and non-official estimates

The Government projects that fuel poverty will fall in England in 2024 to 12.7% (3.1 million households) which would be the lowest ever level on the current definition. In England only those households in homes with lower energy efficiency (bands D-G) who fall below the poverty line after energy costs are considered to be in fuel poverty. In 2023 2.5 million households in England were in the lowest two income deciles (10% groups), but were not deemed to be in fuel poverty because their property had a rating of C or better.

The definition in England also means that direct energy rebates, such as the Warm Home Discount, are treated as if they improved the energy efficiency of a dwelling. This reduces the numbers deemed to be in fuel poverty without the added benefits of actually improving energy efficiency such as reducing greenhouse gas emissions, cutting reliance on fossil fuel imports and providing green jobs.

The aggregate fuel poverty gap in England (the total reduction in energy costs needed to take all fuel poor households out of fuel poverty) is a measure that is more sensitive to fuel prices. It increased by an estimated 67% between 2020 and 2023. The extent of fuel poverty (the number of fuel poor households under the official definition) did not increase during the ‘energy crisis’, but the depth of their fuel poverty did.

The charity National Energy Action (NEA) has estimated that the total number of UK households in fuel poverty increased from around 4.5 million in October 2021 to 6.7 million in October 2022. Their latest estimate is 6.5 million for January 2024. This figure is more than double the official estimate for England alone. NEA define a houshold as fuel poor if it needs to spend more than 10% of its income on energy to provide a satisfctory heating regime.

The Government has estimated that 8.9 million households in England could be classed as fuel poor in 2023 using a version of this 10% defintion; around double the level in 2021. This estimate includes the impact of the diffferent support schemes introduced by the Government during the ‘energy crisis’ to help make bills more affordable and targeted cost of living payments in 2022/23 and 2023/24.

What is being done to address fuel poverty?

There are both national and devolved policies for addressing the 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 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.
  • The UK Government introduced an energy price cap which protects customers on variable tariffs from price rises for the six month duration that each cap lasts for. There can however be large changes when the cap is revised. The summer (April to October) 2022 price cap was 54% or almost £700 a year higher than the previous cap
  • In February 2022 the Government announced a package of support to help households with rising energy bills, including a £200 upfront discount on bills in October 2022 (paid for by customers in £40 installments over the following five years), a £150 Council Tax rebate for around 80% of households in England, £144 million in discretionary funding for local authorities and £715 milion for the devolved administrations  
  • The Government introduced the Energy Price Guarantee in October 2022 which limited average price rises to around 20%. The scheme has not been needed from July 2023 due to lower energy prices. The Government also paid households £400 over winter 2022/23 through the Energy Bill Support Scheme.
  • The main energy efficiency scheme across Great Britain is the Energy Company Obligation, which requires energy suppliers to install energy effificiency measures in fuel poor, vulnerable or low income homes. Each nation also has its own publicly funded schemes to improve energy efficiency and alleviate fuel poverty. The Library briefing Energy efficiency of UK homes gives more details.

The Library briefing papers Gas and electricity prices during the ‘energy crisis’ and beyond and Domestic energy prices looks at how and why energy prices have changed. 

Suggestions for other measures

Several stakeholders have recommended that Governments 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.

New Fuel Poverty Strategies have been published in Wales and England in 2021. Scotland has published a draft new fuel poverty strategy with the final strategy expected, 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 has worsened 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.

Documents to download

Related posts