Fuel Poverty

Fuel poverty should not exist. A basic necessity in every person’s life is to have a warm, dry home which is affordable to heat. Energy Action Scotland (EAS) believes that having a warm, dry home is a human right and indeed the Universal Declaration of Human Rights Article 25 makes reference to this issue. In this day and age, people should not be making the decision whether to heat their home or feed themselves and their family.

The three main causes of fuel poverty are high energy costs, poor energy efficiency of homes and low income.

High Energy Costs

Around 50% of an energy bill is attributable to wholesale energy costs. Wholesale energy costs are largely affected by global energy rates and it is difficult to influence change in this market. However, the rest of the energy bill is made up of a mixture of network costs, supplier costs and profit, VAT and climate change and social levies.  The UK Government’s levies on energy bills are largely regressive. It is inherently unfair that energy use and ability to pay are not taken into consideration when green taxes and other levies are placed on a consumer’s bill. These taxes hit the poorest the hardest as they pay proportionately more of their income on energy than any other demographic. While broadly sympathetic to the call for removing levies on bills and moving them to the general tax system, to do so would call into doubt energy efficiency and fuel poverty initiatives being funded by the public purse.  Instead, the funding would become susceptible to annual budgetary negotiations and the flux of government priorities.  EAS therefore supports the need for reform of the levy system, with reforms taking account of ability to pay and energy requirement eg on health grounds.

Poor Energy Efficiency of Homes

Good energy efficiency and a high standard of housing are essential to help mitigate increasing energy prices and reduce fuel poverty. EAS believes that there needs to be a continued push to improve housing standards and domestic energy efficiency so that no household needs to waste energy just to maintain a healthy temperature standard. This is good for consumers, who end up using less energy and therefore spend less on their bills. It is also beneficial for the environment by saving carbon emissions; it also lowers energy demand thereby reducing the strain on energy networks. 

Housing standards should be strengthened, in EAS’s opinion.  EAS would support the introduction of a basic standard for insulation and heating for all private sector housing.  The aim should be to upgrade the worst-performing properties so that they no longer put people into fuel poverty.  This will have to be achieved through a combination of incentives and legislation, as is already underway in the social rented sector.  These standards should be brought forward and implemented in order that they can in particular  help the thousands of private tenants who struggle to pay higher than necessary energy bills.

Low Income

One of the main causes of fuel poverty is low disposable household income. EAS is concerned that current welfare reform is impacting negatively on many household incomes. Any changes to welfare should, in our view, be made in the framework of allowing people to have a minimum standard of living.  However, fuel poverty does not only affect those who are unemployed. The number of people who are working but are poor is rising and EAS is therefore a supporter of the Living Wage Campaign. Everyone should be paid at least the Living Wage, which will help them to afford a decent standard of living.