Debate Pack: Fuel Poverty

Fuel poverty definitions

Fuel poverty in England is measured by the Low Income High Costs definition, which considers a household to be in fuel poverty if:

• they have required fuel costs that are above average (the national median level)
• were they to spend that amount they would be left with a residual income below the official poverty line

Previously the UK Fuel Poverty Strategy published in November 2001 had recommended that the numbers of households suffering fuel poverty in England should be displayed using two main definitions. These are as follows:

• A household is in fuel poverty if, in order to maintain a satisfactory heating regime, it would be required to spend more than 10% of its income ( including Housing Benefit or Income Support for Mortgage Interest) on all household fuel use;
• A household is in fuel poverty if, in order to maintain a satisfactory heating regime, it would be required to spend more than 10% of its income ( excluding Housing Benefit and Income Support for Mortgage Interest) on all household fuel use.‘A household is in fuel poverty if, in order to maintain a satisfactory heating regime, it would be required to spend more than 10% of its income (including Housing Benefit or Income Support for Mortgage Interest) on all household fuel use’ The Scottish Government commissioned, on behalf of the Fuel Poverty Forum (FPF), a review of the evidence in relation to the assumptions underpinning the definition of fuel poverty in Scotland and this research is now completed.  However, the Forum considers that the outcome of the research, while exceptionally useful, does not support informed reason to change any of the underpinning values of the definition at this time. It is now the Fuel Poverty Forum’s intention to engage in discussions with stakeholders before making any final decision on recommended changes. 
• Extreme fuel poverty indicates that a household would have to spend more than 20% of its income to maintain a satisfactory heating regime.
• The Scottish and Welsh definition of fuel poverty is set out in the Scottish Fuel Poverty Statement (2002), it follows the 2001 definition above.

Comparing fuel poverty across the UK

It is possible to compare the extent of fuel poverty across the UK if the 10% definition is applied to England as well as the devolved administrations.

Using this definition it is estimated that there were around 4.5 million fuel-poor households in the UK, representing 17% of all households.[1]

[1] DECC, Annual fuel poverty statistics report: 2015

 Current UK Government fuel poverty initiatives

A range of measures are currently available to help alleviate fuel poverty. Targeted support includes direct financial assistance for paying bills (eg the Warm Home Discount and Winter Fuel Payment) and energy saving measures (eg Energy Company Obligation ECO) to help reduce costs. They are covered in the Library Note, Help with energy bills. The Government has withdrawn funding from the Green Deal Scheme which was the main, though much criticised, policy for promoting energy efficiency in the home. The Government has also indicated that changes will be made to the Energy Company Obligation so that it its help is “concentrated on those in greatest need” from 2017. The Autumn Statement 2015 announced the Warm Home Discount scheme will be extended to 2020-2021