What is fuel poverty? The causes, statistics and solutions in the UK
We break down the definitions of fuel poverty, how it is calculated, the causes, risks and the solutions in the cost of living crisis
by: Josh Sandiford, Isabella McRae
1 Dec 2022
Millions of people in the UK are experiencing fuel poverty. Flickr/Richard Gillin
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A total of 8.4 million people are expected to be living in fuel poverty from April 2023, according to estimates from National Energy Action.
This means one in three families across the country will face fuel poverty. It could leave them unable to heat their homes, have a shower or cook a hot meal.
The latest estimates come after the government confirmed the average household energy bill will rise to £3,000 a year from April, under the new energy price guarantee.
Adam Scorer, chief executive of National Energy Action, said: “Millions of the most vulnerable – carers, people with disabilities, those on low incomes and living in inefficient homes – are already bearing the brunt this winter.
“The situation will continue to get worse next year. The effects of this are devastating on both physical and mental health. Make no mistake, cold homes can kill. Government intervention must prioritise the most vulnerable in 2023 and beyond.”
This is what you need to know about the definitions of fuel poverty, how it is calculated, the causes and risks and the solutions.
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What is considered fuel poverty?
Fuel poverty is defined by the government as a condition “where a home cannot be kept warm at reasonable cost without bringing a person’s residual income below the poverty threshold”.
With energy bills too high for them to afford, fuel poor households are left unable to turn on their heating in the depths of winter or to cook hot meals.
A household is considered fuel poor based on their income, energy efficiency rating (the higher the energy efficiency, the lower the fuel costs), and fuel prices.
In England, a property with an energy efficiency rating of C or better cannot be defined as being in fuel poverty, regardless of their income or the level of energy prices.
By the government’s definition, energy rebates like the Warm Home Discount are treated as if they improve the energy efficiency of a dwelling.
This reduces the number of people officially deemed to be in fuel poverty, without the added benefits of reducing greenhouse gas emissions on their property.
How do I know if I am in fuel poverty?
Because of the way fuel poverty is calculated, fuel poor households might include those who aren’t traditionally considered poor, but are pushed into fuel poverty by their high energy requirements. Others, who have relatively low incomes, might also have lower energy costs and not be considered fuel poor.
They are living in a property with a fuel poverty energy efficiency rating of band D or below
When they spend the required amount to heat their home, they are left with a residual income below the poverty line (people are considered to be in poverty if their household income is 60 per cent lower than the median across the UK)
This is known as the Low Income Low Energy Efficiency (LILEE) indicator and is used in England to calculate fuel poverty rates.
If your home has a fuel poverty energy efficiency rating of band D or below, and your income falls below the poverty line, you are classified as ‘fuel poor’ according to the government’s indicator.
It might sound like a lot of big numbers and percentages that are tricky to understand, but it’s not your responsibility to calculate if you are living in fuel poverty. In theory, the government can figure out how many fuel-poor households there are and how badly affected each household is, using their indicator.
The government then works out the fuel poverty gap – or the amount a household would need to make up to not be classed as fuel poor. This tells them how much extra a household would need not to pay their energy bills.
To get a sense of the problem at a national level, the government then adds up the fuel poverty gap for each individual household to produce an overall estimate.
How many households in the UK are in fuel poverty?
An estimated 3.16 million households in England were defined as fuel poor in 2020, the most recent year for which statistics are available. This was 13.2 per cent of all households. It was 25 per cent in Scotland, 12 per cent in Wales, and 18 per cent in Northern Ireland.
National Energy Action has estimated that 8.4 million UK households will be in fuel poverty from April 2023. The charity’s figures show that the number of households in fuel poverty will increase from 4.5 million UK households last October.
What causes fuel poverty?
The key factors that contribute to fuel poverty are the energy efficiency of a home, the cost of energy bills, and household income, according to anti-poverty charity Turn2us.
Soaring household energy bills are a big factor in the increasing numbers of people living in fuel poverty in the UK.
Bills increased by 54 per cent in April 2022, a record increase as regulator Ofgem increased the energy price cap. The monthly rise in both gas and electricity prices were by far the largest recorded since 1988.
As prime minister, Liz Truss announced an energy price guarantee of £2,500 from October, meaning families and individuals were paying double what they were earlier this year. Jeremy Hunt has confirmed the price guarantee will be rising to £3,000 in April 2023.
Many people live in draughty homes and rely on heating systems that are old and inefficient. The heat escapes even when turned up to full, making it harder to bring down the total cost of bills.
Others face hardship because their income is low, or because they can’t rely on regular work. People might also feel unsupported by the welfare system and struggle to access universal credit, which can have an impact on whether they can afford energy.
Those who find themselves in this situation might feel forced to prioritise buying food or other essentials and sacrifice energy bills.
How does fuel poverty affect people?
An estimated 10,000 people die each year from health conditions arising or worsening from having a cold home, according to National Energy Action, which campaigns to end fuel poverty.
Fuel poverty can cause respiratory infections and bronchitis, stress on the cardiovascular system, make asthma symptoms worse or cause asthma to develop, and contribute to mental health struggles. That’s according to charity Friends of the Earth.
Amid a cost of living crisis, families face a sharp spike in energy costs, meaning those who have old gas boilers or cookers may not be able to afford to cook a hot meal or have a hot shower.
It’s no longer a choice between heating or eating – many vulnerable people living in the UK can’t afford either and are relying on charities to survive.
Pensioner Elaine told the Big Issue she has not put on the heating in her home for three years because she can’t afford her bills. “I don’t have anything now to live on,” Elaine said. “I have no money. The cost is going up and up, and I know I won’t be able to pay for the electricity, so I’m going to have to get lights with batteries.”
Food bank manager Charlotte Write wrote in the Big Issue: “Since the cost of living crisis has accelerated, items like instant noodles (which only require a kettle) or no-cook items like corned beef and spam have become much more popular.
“As guest Heidi says: ‘I have £1 left on the electric for the rest of the week. I need this to charge my girls’ tablets so they can do their school homework, I can’t put the oven on as well.’”
Who is at risk of fuel poverty?
Fuel poverty impacts some groups of people more than others. National Energy Action reports that 5.9 million low-income and financially vulnerable households will be in fuel poverty from April, as well as 1.8 million carers, 3.6 million people with a disability and 1.6 million in off-gas homes.
According to the government’s statistics, ethnic minorities are more likely to struggle with fuel poverty. In the two years to March 2021, an average of 12.6 per cent of white households were in fuel poverty, compared with 19.1 per cent of households from all other ethnic groups combined
Older people are also more likely to suffer from fuel poverty. Age UK says retired households have the highest average fuel costs compared to those of other ages. Academics at the University of York found more than 90 per cent of large families and pensioner couples will be in fuel poverty by January 2023.
People living in the poorest and coldest regions of the UK are likely to be the worst affected by growing fuel poverty rates along with those who are already most likely to be struggling with the cost of living.
Where to get help if you can’t afford your energy bills
There is help out there for people facing fuel poverty (and those who just can’t afford to pay their energy bills). This might come in the form of benefits and support from the government. For example, some people qualify for the Winter Fuel Payment to help them pay their heating bills. This is a one-off payment made to households that include someone over pension age.
You can also get charitable grants if you need extra financial support, and your energy supplier can offer help to people who need it.
As we face a cost of living crisis, campaigners are calling on the government to tackle fuel poverty by making homes more energy efficient, introducing a windfall tax on big energy companies, and providing additional support to people on low incomes.
Fuel Poverty Action is campaigning for ‘Energy for All’ – they want a more effective windfall tax, and an end to the huge subsidies going to oil and gas producers, traders and suppliers, and higher prices for people who use much more energy than they need.
Simon Francis, End Fuel Poverty Coalition Co-ordinator, said: “While we need emergency financial support to help the most vulnerable stay warm this winter, we also need the government to invest in long term solutions to fuel poverty. This includes additional support for energy efficiency measures, investment in renewables and weaning the nation of volatile fossil fuels which are at the heart of how we got into this mess in the first place.”
The Big Issue’s #BigFutures campaign is calling for investment in decent and affordable housing, ending the low wage economy, and millions of green jobs. The last 10 years of austerity and cuts to public services have failed to deliver better living standards for people in this country. Sign the open letter and demand a better future.
Your local vendor is at the sharp end of the cost-of-living crisis this Winter. Prices of energy and food are rising rapidly. As is the cost of rent. All at their highest rate in 40 years. Vendors are amongst the most vulnerable people affected. Support our vendors to earn as much as they can and give them a fighting chance this Winter.
