Blog Post 19: Expensive Fuel and Fuel Poverty in the UK

Two weeks ago, a mail from energy supplier shocked my house. Energy bill (electricity and gas) for the past 3 months amounted to £2050, which was £186 per person. National average dual fuel bill for a house with more than 5 rooms is £137. Our £683 per month is extremely expensive price. I’m not writing about why my shared house is extremely costly to heat. Despite the shocking price of energy, we paid and the house is still warm enough (We set lower house temperature though). This event let me think about fuel poverty which has suffered British poor every winter.

According to the UK government’s definition of fuel poverty, a household is 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

In England, it is estimated that fuel poverty affected 2.55 million households in 2016 (Action for Warm Homes). Although the situation has marginally improved since 2012, the government failed a legal obligation of eradicating fuel poverty by 2016, which was set in 2000. In spite of existence of fuel poverty related benefits, thousands of low income people living in energy inefficient house struggle to heat their home sufficiently, which leads to health problem. In fact, 9000 people died due to cold house in England and Wales in the winter of 2014-15 (BBC, 2016).     

Causes

There are three main causes for fuel poverty. 1. Low income: poorer households are more vulnerable than affluent households. They have to spend higher proportion of earnings for energy. 2. Rising fuel price: fuel price has been increasing in the past 3 years (Ofgem, 2019). This is the main reason why fuel poverty rate has increased since 2006. 3. Energy inefficiency: less energy efficient houses require more energy to heat their rooms. Thus, energy bill will be more expensive. The increasing fuel price makes a big gap between cost of energy for an efficient home and an inefficient home. This means that poor people living an energy inefficient house is likely to suffer from severe fuel poverty.  

Solutions

Are there solutions to reduce number of fuel poor household? The government has provided financial aid via ‘Winter Fuel Payment’ for those who cannot heat their home sufficiently. However, this does not reduce the number. Brenda Boardman, one of the most experienced British expert on housing energy efficiency, stresses improving energy efficiency as an ultimate solution to eradicate fuel poverty. The government has provided fund to refurbish old energy inefficient house via ‘Warm Front’ and other energy efficiency related programs. However, those policies are not implemented large enough scale. And there is a mismatch between eligible household and actual fuel poor. Only 20% of fuel related benefits went to fuel poor (Boardman, 2010). Furthermore, the continual fuel price rise decouples the effect of efficiency improvement. Empirical evidence showed that fuel poor households who had refurbishment continued to pay almost same amount of money (Atkinson et al., 2017). Therefore, energy bill needs to be cheaper to save fuel poor. Solar Thermal Collector is a renewable solution which can lower the cost of heat. It may be a desirable solution for remote area where there is no gas connection. However, money remains to be a problem for low income household. Initial investment needs to be subsidized to make the solution accessible for people who need it the most.

Low housing energy efficiency and relatively expensive fuel make fuel poor live in cold house, which kills thousands of people every winter. The government has been failing to eradicate this inequality because of insufficient and ineffective policies. Both energy inefficiency and rising fuel price have to be addressed to solve fuel poverty. As long as fuel price surges, fuel poverty will never be eradicated.

Reference

Action for Warm Homes (2018). Fuel Poverty Statistics. Available at

https://www.nea.org.uk/about-nea/fuel-poverty-statistics/ [Accessed 12 Mar. 2019].

Atkinson, J., Littlewood, J., Karani, G. and Geens, A. (2017). Relieving fuel poverty in Wales with external wall insulation. Proceedings of the Institution of Civil Engineers - Engineering Sustainability, 170(2), pp.93-101.

BBC (2016). Cold homes caused 9,000 deaths last winter, study suggests. [online] Available at: https://www.bbc.co.uk/news/uk-35862763 [Accessed 6 Mar. 2019].

Boardman, B. (2010). Fixing Fuel Poverty: Challenges and Solutions. London:

     Earthscan

Ofgem (2019). All wholesale gas charts and indicators. Available at

https://www.ofgem.gov.uk/data-portal/all-charts/policy-area/gas-wholesale-markets [Accessed 12 Mar. 2019].