Fuel Poverty

Fuel Poverty in the UK

What a few weeks it’s been with flooding across vast swathes of southern Britain leaving many without fuel or heat. It perhaps leads us to reflect that many of us take heating for granted, so much so that we don’t really think about it until it is no longer there.

But what if every day were lived without heating, simply because we couldn’t afford to turn on our boilers in the home?

That, unfortunately is the stark reality for many households across Britain. And it is a shocking state of affairs that in this day and age, in a country in the developed world, so many people simply cannot afford to heat their homes effectively, and are putting their health seriously at risk as a result. Many of us have the image of someone who is fuel poor as being a pensioner, but many are young people living in rented accommodation as well as families with young children. The largest group comes from single parents. As of February 2014, According to NEA (National Energy Action) projections, after the most recent round of energy price increases effective of January this year, there are now approximately 6.6 million UK households in fuel poverty. That represents almost 1 in 4 households.

What is the definition of fuel poverty?

Up until 2013, fuel poverty was defined as the need to spend more than 10% of household income on fuel to maintain adequate warmth for health and comfort. A new definition was established last year however by the government and under the new definition, a household is said 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

The main change to the LIHC indicator, since the Annual Fuel Poverty Report published in May, is a change to the methodology used to equivalise fuel bills. Fuel bills are now equivalised by the number of people in the household, rather than the household composition (e.g. lone parent, couples with dependent children). This is to reflect the fact that different sizes of households will have a different required spend on fuel. The previous definition was deemed not to take into account the number of people living in a household and has therefore been changed to reference a framework of income and fuel costs. Under the previous definition, a household was said to be fuel poor if it needs to spend more than 10% of its income on fuel to maintain a satisfactory heating regime (usually 21 degrees for the main living area, and 18 degrees for other occupied rooms).

Rise of Fuel Poverty in the UK

fuel poverty

What is the cause of fuel poverty?

Fuel poverty is caused by three factors:
• inadequate heating and insulation
• low incomes
• the continued high cost of energy
It is most prevalent among vulnerable households, including:
• those on low incomes
• people with children under the age of 16
• people with disabilities or suffering from a long-term illness
• older people

Why is fuel poverty such as problem?

It can have severe impacts on mental and physical health, exacerbating illness or poor health. It is a double whammy as those living in fuel poverty often cut back on food so they can afford a little more heat.

Why is fuel poverty such as problem?

It can have severe impacts on mental and physical health, exacerbating illness or poor health. It is a double whammy as those living in fuel poverty often cut back on food so they can afford a little more heat.

What is being done to tackle fuel poverty?

Both national programmes and individual campaigns and lobbying are done to reduce the impact of fuel poverty. The government are targeting the most vulnerable groups and offering financial incentives to install loft and cavity wall insulation into their homes to make them more energy efficient. Other measures to tackle fuel poverty include Smart metering, and subsidies from energy suppliers to the most vulnerable households (the Energy Company obligation). Whether they are actually reaching the people they are supposed to is another question. Encouraging people to switch suppliers if they have never done so or to shop around for better deals is another way to help those in fuel poverty.

There is also direct financial help through:
Warm Home Discount – participating energy suppliers help low-income and vulnerable households meet energy costs
Winter Fuel Payment – an annual payment of up to £300 for pensioner households
Cold Weather Payment – payment during periods of severely cold weather to pensioners who receive pension credit or people on income-related benefits who meet certain criteria
• The Energy Company Obligation (ECO) which fully funds loft, cavity and solid wall insulation for householders that qualify through age or their dependence on specific benefits.

Again, it is debateable whether those people who qualify actually end up getting the discount. The system of identification is often cumbersome and complex and many households fail to take advantage of the support and investment mechanisms available to them. Indeed some quarters argue that providing discounts and targeted financial help is a ‘quick fix’ and does not address the issue that energy prices have been increasing at inflation-busting levels over the last 5 years and look set to continue to do so. There is no easy answer, but if energy prices are determined by supply and demand, perhaps if every household were inspired or helped to start being more energy conscious we would not only help the environment (and prevent the global warming that is inextricably linked to the flooding we have seen in recent weeks) but we could also help our pockets too.

Articles about Energy Switching:

switching sites

Switching sites aren’t responsible for higher energy bills, here is why:

One of the recent new entrants into the energy supply, a well-known brand outside of the energy space, have taken it upon themselves to put the boot into switching sites. (…)

Sources: OFGEM, Wikipedia
Compare Energy Prices with MyUtilityGenius.

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