People living in fuel poverty have generally been defined as those households that must spend a high proportion of their household income to keep their home at a reasonable temperature.
But as fuel prices have increased, so the definition of fuel poverty has changed, and more and more people are finding themselves plunged into that bracket.
The main causes are generally held to be low income, high fuel prices, poor energy efficiency, unaffordable housing prices and poor quality private rental housing.
It is estimated that more than three-quarters of households in the UK (or 53 million people) will have been pushed into fuel poverty by the start of 2023.
The Government uses the Low Income Low Energy Efficiency (LILEE) definition for fuel poverty in England (Scotland, Wales and Northern Ireland use different definitions). Under the LILEE indicator, a household is considered to be fuel-poor if:
• They are living in a property with a fuel poverty energy efficiency rating of band D or below; and
• When they spend the required amount to heat their home, they are left with a residual income below the official poverty line.
There are three important elements in determining whether a household is fuel poor:
• Household income;
• Household energy requirements – energy efficiency is a key driver of fuel poverty, as higher energy efficiency reduces a household’s fuel costs for a particular size of property; and
• Fuel prices – the energy price cap, which keeps suppliers from setting their default tariff higher than a set amount, is largely determined by wholesale energy prices.
In Scotland and Northern Ireland if a household spends more than 10% of its income on fuel costs and if the remaining household income is insufficient to maintain an adequate standard of living – it is considered to be in Fuel Poverty.
Similarly In Wales, this is measured as any household that would have to spend more than 10% of their income on ‘maintaining a satisfactory heating regime’.
The depth of fuel poverty is measured by the fuel poverty gap, which is a measure of the additional fuel costs a fuel-poor household faces in order to be determined non-fuel poor.
It is generally accepted that fuel poverty will be eased – if not fully solved – by a combination of financial support for households affected, reform of the energy market, improving energy efficiency of homes and a secure, renewables-led, energy system.