Fuel poverty help, advice and solutions
The Utility Saving Expert guide to Fuel Poverty
We all want to keep our energy bills as low as possible. But for some people, due to fuel poverty, keeping energy bills down isn’t about saving a few pounds each month to spend on life’s little luxuries. It’s about the difference between heating and eating. Use Utility Saving Expert’s energy comparison site to compare electricity and gas to see how much you could save today.
Fuel Poverty is a huge problem in this country and we want to do our part to end it.
We set up UtilitySavingExpert.com to make it easy for you to switch energy suppliers so you can get a better deal. We believe that the more people who change energy suppliers regularly, the more competitive energy companies will be forced to be, the less we will have to pay for our energy and the less people will suffer from fuel poverty.
We also donate 10% of our profits each year to two charities dedicated to ending fuel poverty in this country: National Energy Action and Energy Action Scotland. You can find out more about these charities and the work they do towards the end of this page.
Read on to find out more about fuel poverty and what can be done about it.
What is fuel poverty?
Fuel poverty is such a widely recognised problem in the UK that it has its own official definition.
In England and Wales, the latest definition of fuel poverty was set out by the Department for Energy and Climate Change (DECC) in June 2013. (DECC was replaced in July 2016 by the Department for Business, Energy and Industrial Strategy.) The definition states that a household is said to be in fuel poverty if:
- Their income is below the poverty line (taking into account energy costs); and
- Their energy costs are higher than is typical for their household type.
The definition also uses a fuel poverty gap. This is the difference between a household’s modelled bill and what their bill would need to be for them to no longer be fuel poor. The purpose of the fuel poverty gap is to measure the severity of the problem faced by fuel poor households.
This definition of fuel poverty means both the ‘extent’ and the ‘depth’ of fuel poverty can be measured.
In Scotland and Northern Ireland, the definition is much more straightforward. According to the Scottish Fuel Poverty Statement, published in 2002, a household is in fuel poverty if it would be required to spend more than 10% of its income on all household fuel use in order to maintain a satisfactory heating regime. If over 20% of income is required, then this is termed as being in extreme fuel poverty.
For “vulnerable” households, a satisfactory heating regime is defined as 23°C in the living room and 18°C in other rooms. For other households, it is 21°C in the living room and 18°C in other rooms.
Income is defined by the Scottish Government as that of the householder and their partner not the whole household.
This information helps us to understand how fuel poverty is defined. In the next section we will look at the scale of the problem.
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How big of a problem is fuel poverty?
Quite simply, fuel poverty is a big problem for the UK.
In 2014 it was estimated that 4.5 million households in the UK were in fuel poverty. This equates to around 15% of all households in the UK.
These figures mean the UK’s ranking on fuel poverty in Western Europe is 14th out of 16. And the UK is 16th out of 16 when it comes to the proportion of people who cannot afford to adequately heat their home.
We can get an insight into who is most affected by fuel poverty by looking at the figures for Scotland. Here, 59% of fuel poor households are owner occupiers, 27% are social housing residents and 15% rent in the private sector. Older households make up 45% of the households who are affected by fuel poverty.
As well as understanding how many people fuel poverty affects, it is important to look at the problems it causes. Perhaps the biggest problem is in relation to health.
Living in a cold home affects the health of people living with a heart condition or suffering from respiratory problems such as asthma. Low temperatures make it harder to resist infection as well as encourage damp and mould growth in the home, which makes the problem worse.
There is a link between living in a cold home and poor mental health as a result of anxiety and stress. People who struggle to pay their energy bills are forced to ration their use of energy, perhaps only heating a single room or having to choose between having a hot meal and having a heater on. Using appliances such as a washing machine and heating water for baths or showers can be a concern too. There is also an increased risk of social isolation if a home is not warm and therefore not welcoming.
A cold home affects future generations too: there is evidence that cold homes can reduce educational attainment.
These problems all have very real outcomes. The average number of ‘Excess Winter Deaths’, which is linked to cold indoor temperatures, is 27,405 each year. More people die from cold homes than alcohol, Parkinson’s or traffic accidents. (Excess Winter Deaths are defined as the difference between the number of deaths in the four winter months (December to March) and the average of the numbers of deaths in the two four month periods which precede winter (August to November) and which follow winter (April to July).
Fuel poverty also affects the wider economy. It is estimated that in the next 15 years fuel debt will mean £950 million less will spent in local economies, preventing our country thriving as it could. It will also result in an additional £22 billion needing to be spent by the NHS on treating cold-related admissions.
What are the causes of fuel poverty?
The three biggest factors causing fuel poverty are:
- The energy efficiency of a property and therefore the energy needed to heat and light it
- The cost of energy
- Household income
Let’s put some numbers against those three causes.
There is a direct correlation between a poorly insulated home and a fuel poor home: 96% of the homes with fuel poor households are poorly insulated. This equates to the average fuel poor household having to pay an extra £371 per year to stay warm compared to an average UK household.
Energy bills have also been rising sharply in recent years. Figures from 2015 show that in 2005 the average annual gas bill was £317 and the average annual electricity bill was £318. In 2015, the figures had risen to £715 and £584 respectively. These figures far outstrip the price of inflation: according to the Bank of England’s inflation calculator, if gas prices had kept pace with inflation between 2005 and 2015, the average annual gas bill would have been around £427 in 2015.
What are the solutions?
The means to tackle fuel poverty depend on the area you are talking about: England and Wales has different legislation to Scotland when it comes to fuel poverty and there is a range of policy, legislation and schemes in place at local and national level to do this.
But broadly speaking the solution to fuel poverty is to address the three main elements of fuel poverty – poor household energy efficiency, low incomes and high energy prices. There is a general consensus on the types of measures that need to be taken. They can be summarised as follows:
- Making greater investment in energy efficiency in homes
- Tackling high energy prices
- Ensuring that households in fuel poverty receive all the benefits to which they are entitled
- Tackling the link between public health and fuel poverty
- Educating people on the advantages of energy efficiency and energy awareness through the use of new smart technology.
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What help is available?
Tackling fuel poverty in the long term involves strategic change. In the short term, there is help available for those experiencing fuel poverty now.
There are several government schemes available to support those affected by fuel poverty. They include:
- Winter Fuel Payments
- Cold Weather Payments
- Warm Home Discount Scheme
Winter Fuel Payments
A Winter Fuel payment is a one-off, tax-free payment of between £100 and £300 made during the winter to help with heating costs. It is made to households that include someone over Pension Credit age.
The payment is typically made automatically during November and December.
The amount a person can receive each winter varies according to their personal circumstances. Factors that might affect the amount include their age or other people living with them who are also eligible.
The Winter Fuel Payment does not count as income when working out entitlement to other benefits.
Cold Weather Payments
A Cold Weather Payment of £25.00 is made to people on certain means-tested benefits to help with fuel costs during periods of very cold weather.
The average temperature must be 0ºC or below for at least seven consecutive days and fall between 1 November and 31 March.
A Cold Weather Payment does not affect any other benefits or tax credits.
Warm Home Discount Scheme
The Warm Home Discount Scheme provides a one-off discount of £140 on an eligible household’s electricity bill between October and April.
The discount is available to two groups of people:
- People whose electricity supplier is part of the scheme and who receive the Guarantee Credit element of Pension Credit are guaranteed the discount
- People whose electricity supplier is part of the scheme and who receive certain means-tested benefits may be eligible for the discount.
Grants to help improve energy efficiency in fuel poverty homes
There are also grants available to help people improve the energy efficiency of their privately owned or rented home. Such grants might cover the cost of updating a heating system or fitting additional insulation, for example. These grants are operated by the Government, energy suppliers, local councils and other sources. Some schemes are only available to people on low incomes or certain benefits.
Information for advisors
There are sources of information available for advice workers working with people struggling with unaffordable energy costs to help them work towards resolving the problems.
National Energy Action’s Fuel Poverty Action Guides are designed to be practical and easy-to-use documents that will help advisors identify the best solutions for householders who are worried about keeping their homes warm and paying their energy bills. The guides are available at www.nea.org.uk. You can also use their fuel poverty assessment tool to help front-line home energy efficiency assessors and fuel poverty programme workers to calculate whether a resident is living in fuel poverty.
Energy Action Scotland has an Advisors Toolkit to help frontline advisors whose clients include the vulnerable and/or those in fuel poverty. The Toolkit offers a wide range of easily-accessible, practical information relating to fuel poverty and energy efficiency in Scotland. It is available at www.eas.org.uk.