Fuel poverty – what can we do?

Fuel poverty affects between 4m and 5.5m people in the UK. Josh Stott asks whether existing policies will reduce this.

Somewhere between 4 and 5.5 million people in the UK live in fuel poverty – defined broadly as a situation where a household spends more than 10% of its income on fuel costs. Will existing fuel poverty policies reduce this number and, if not, what are the alternatives?

New research into fuel poverty

Two new reports prepared by the IPPR and NEA for JRF call into question the effectiveness of existing fuel poverty and raise concerns over the impact of environmental policies on low income households. The research suggests the Government is failing to take advantage of key opportunities to help fuel poor households by making their homes more energy efficient. Of course there are suggestions that the fuel poverty measure I referred to earlier needs to be changed, but Professor John Hills' interim report confirms that the problem is significant, whatever the definition.

Although governments may lack the power to influence global energy markets and are inhibited from interfering in the domestic market of the 'Big 6' energy companies, more can be done. A real difference to fuel poverty can be made by improving the energy efficiency of the homes of the fuel poor.

UK fuel poverty policies aren't working

The average family household fuel bill per year is around £1,300. This figure rises to over £2,000 for families in poorly insulated homes who want to achieve the same level of warmth. Unfortunately, while good insulation can have a massive impact on the cost of heating homes, many people on low incomes who have to choose between 'heating or eating' may see the prospect of installing costly upfront insulation as unrealistic.

Worse still, with the ending of the Warm Front programme next year there will be no state-funded, grant-aided energy efficiency programmes. All energy efficiency initiatives will be funded through energy bills.

Ironically, this additional cost (and the numerous other climate change-related levies geared towards promoting low carbon energy production) will have a regressive impact that penalises low income households.

Even the proposed new Energy Company Obligation (ECO) is not going to be a dedicated fuel poverty programme. Amazingly, ECO funding will actually be diverted to better off households living in 'hard to treat' properties that are too costly to be funded through the Green Deal.

What alternative policies are available?

The IPPR and NEA reports call for:

  • ECO funding to prioritise homes in fuel poverty;
  • the need for more effective targeting of the fuel poor;
  • a firm link between energy rebates (targeting fuel poor pensioners through the Warm Homes Discount) and investment through the ECO programme.

This really does seem like a no brainer – the pensioners most in need of help with their bill should also be given help to reduce their bills.

There is no doubt that reducing or eliminating fuel poverty would significantly reduce the 27,000 'excess winter deaths' in the UK. This figure is far higher than other countries with colder climates and is a stark indicator of the lack of support afforded to the most vulnerable in our society. So, while the Hills Review team continue to grapple with the definition of fuel poverty, once again there is an urgent need to help low income families reduce their fuel bills this winter.