Challenge Poverty Week 2015 briefing on Fuel Poverty and Poverty

There are many kinds of poverty. Here we will look at one of these: fuel poverty, and discuss how it links to overall poverty.

What is fuel poverty? The official definition of fuel poverty is the need to spend more than 10% of income to pay for fuel bills.  If over 20% is required, then this is termed as being in extreme fuel poverty. In Scotland, 39.1% or 940,000 households (not people, but households) are officially recognised as being in fuel poverty. The level of extreme fuel poverty was 252,000 households (10.5%). [1]

Few people would think of themselves as being in fuel poverty, but change the language used and it is a different story. So what does fuel poverty really mean? It means you can’t afford to put your heating on. It means that you’re having to choose between buying food or buying fuel. You’re skint and you don’t know whether you should keep your money for food tomorrow or whether you spend some now to keep you and your family warm tonight. It’s when you get really stressed as your energy bills are increasing and you start getting into debt and you worry how you’re going to cope.

Poverty is usually measured by incomes; however fuel poverty cannot be defined by income alone. Low income is a major contributor to fuel poverty but it is not the only factor. Fuel poverty comes about as a result of three main factors. These are: low disposable incomes, high domestic fuel prices and the poor energy efficiency of a dwelling. Two of these are reserved matters to the UK Government, these being income and energy costs but the energy efficiency of a home is in the province of the Scottish Government and it is in this area that a lot of investment is focused.

Fuel poverty is strongly linked to income and the lower income groups have the highest rate of fuel poverty. For instance, those households with a weekly household income of under £200 have a fuel poverty rate of 94% while only 2% of households with an income of over £700 are in fuel poverty. Households in the more deprived areas often have lower household incomes.  The fuel poverty rate in the 15% most deprived areas in Scotland is higher than average at 45%.

Who suffers most from fuel poverty? According to the Scottish House Conditions Survey 2013, householders who have a mortgage are least likely to be categorised as fuel poor, however over half of the homes owned outright are in fuel poverty – 56%. In this group, many households consist of pensioners who live in larger properties therefore more energy is required to heat them, and are likely to be detached which leads to increased heat loss. Pensioners are likely to have a low or fixed income. These factors perhaps explain the level of fuel poverty in that group. Single pensioner households had the highest fuel poverty rate in 2013 at 66%.

Fuel poverty rates in rural areas are much higher than in urban areas. Rural fuel poverty rates are at 55% compared with 36% in urban areas. This is due to many households being off the gas grid (gas being the cheapest domestic fuel), many of the dwellings are large and likely to be detached and more likely to be exposed to bad weather. People living in rural areas are also more likely to face extra high costs of living. Costs in some areas for off grid gas heating are almost double the cost of heating a home in a town or city.[2] In order to address this particular issue, the Scottish Government has set up a short-life working group, the Rural Fuel Poverty Task Force and it will report to Ministers by the end of next year.

A lot of the increase in fuel poverty rates in recent years has affected tenants in the private rented sector. This links to the poverty rates in that sector, which has increased in the past ten years, and is mainly made up of working – age adults. There is increasing evidence that employment is not enough to take people out of poverty. The Scottish Government is doing what it can to mitigate the effects of welfare reform. Efforts to increase the number of Living Wage employers in Scotland is also important.[3]

For people on a low income and struggling with fuel bills, the UK Government also provides support. The Warm Home Discount is a one-off discount, administered by energy suppliers, on electricity bills for those on Pension Credit or other means-tested benefits. The Winter Fuel Payment is targeted at pensioners and pays a lump sum every winter to help with fuel bills. Research carried out by Age UK showed that 12,000 deaths were prevented each year by the Winter Fuel Payment.[4] There is also a Cold Weather Payment which is paid to those on benefits when the weather is consistently cold over a 7 day period.

The Housing (Scotland) Act 2001 requires the Scottish Government to eradicate fuel poverty in Scotland, as far as is practicable, by November 2016. Every five years a Fuel Poverty Statement is published charting the progress made towards this target. Despite the amount of funding given to tackling the problem, there is increasing pressure on the Scottish Government to say how it will meet this target.  Many, including Energy Action Scotland, are urging Ministers to open a dialogue now about plans beyond the current target date.

At a recent seminar hosted by Energy Action Scotland[5], the participants reported a need for holistic support for the fuel poor and vulnerable e.g. looking at income maximisation and tariff advice and alternative payment methods alongside advising them about insulating their homes and making them more energy-efficient.

 A key issue is that identifying and contacting people who are in fuel poverty is very difficult. The reality of the situation is that many people are not willing to disclose their income. Data sharing and data matching, such as has been taking place between the DWP and the energy companies, is considered to be very helpful in solving this.

Energy Action Scotland believes that having a warm, dry home is a human right and that people should not have to make the choice between heating their home or feeding themselves and their family.




[1] Scottish House Conditions Survey: Key Findings 2013, Scottish Government, 2014

[2] Remotely Excluded: Barriers facing Scotland’s rural consumers, Citizen’s Advice Scotland, 2015

[3] Scottish Living Wage Accreditation

[4] Have winter fuel payments reduced excess winter mortality in England and Wales?, Age UK, 2015

[5] Reaching the Target to End Fuel Poverty by 2016 – One Year Milestone, EAS, 2015