by Jacqui Harris | 13 July 2020
In England, a household is said to be in fuel poverty if its income is below the poverty line (taking into account energy costs) and its energy costs are higher than typical for its household type. This is called the low-income high-cost calculation.
High fuel costs are associated with housing that is not energy efficient. Efficiency is estimated across all housing using the Energy Performance certificate - a band G property is likely to have an energy running cost 3 times higher than a home in the A, B, or C category.
These reports help the government (and us!) identify trends in fuel poverty and monitor if things are going in the right direction. The right direction being; that the quality of housing in the UK is improving through energy efficiency measures - leading to lower overall bills and a reduced chance of fuel poverty (hurrah!).
In 2014 BEIS announced its aim to have as many homes as possible at an EPC rating C by 2030. Warm & Well help to achieve this by supporting Gloucestershire and South Gloucestershire residents in accessing funding to improve their home and generally providing advice to those in need of help with their home/bills.
Overall, the number of people in fuel poverty decreased by 0.7% in 2018. Sounds like good news? Unfortunately, there are still 2.4 million households in fuel poverty and due to annual fluctuations, this doesn’t represent a radical change.
The average fuel poverty gap increased from £328 in 2017 to £334 in 2018. So while we may have fewer people in Fuel Poverty overall, those that are in a worse financial situation.
The energy efficiency of housing is going in the right direction but slowly. 2.1% of houses are still in band G, 5.4% in F and 23.4% in E, whilst this is an improvement since 2010 (4.8% G, 14.1% F and 48.4% E) there is a lot of work to be done to hit the target of ‘as many fuel poor households as reasonably practicable achieve a minimum energy efficiency rating band C’ for 2030.
To pay by standard credit is now the most expensive way to pay your energy bills. The most expensive way to pay for energy previously was through a prepayment meter, but with the introduction of the prepayment cap, this has kept costs down and the gap is now £404 for standard credit and £246 for prepayment meter.
Since 2003, when BEIS started monitoring (using the LIHC calculation), the figures have fluctuated between 10-12% of households in fuel poverty. In 2018 we’re hovering at 10.3% of households in fuel poverty. Households living in rural areas are most likely to be in fuel poverty (12.0% of rural households are in fuel poverty) and have the largest fuel poverty gap at £690. Households that live in privately rented properties are also more likely to be in fuel poverty than those in social or privately-owned housing.
Overall energy prices are rising but due to the introduction of National Living wage and cap on prepay meters, the income of the fuel poor group has gone up more than the cost of their energy.
The greatest positive changes during 2018 were the prepayment meter cap and the national Energy Company Obligation (ECO) scheme to support low-income households. Price caps may be something the government should consider enforcing on other payment methods that are subject to high rates and favoured by those with limited income – such as standard credit. There is now a new round of ECO with different offerings, calculations, and regulations, it will be of interest to see whether this is an improvement on the last scheme in terms of its effect on fuel poverty or not.
The combination of improved energy efficiency of housing (using ECO), prepayment cap, and the introduction of the National Living Wage still only led to a 0.7% overall reduction in total households in fuel poverty. It seems that we may need more radical change or improvement to get the total number of households in fuel poverty below 10% of our populations (which we have struggled with since 2003).
From Severn Wye’s perspective, new or more generous aid schemes (for whole-home improvements) are needed to help those currently in and hovering above the fuel poverty line. Ideally, this would be funding to retrofit the property to dramatically improve the properties energy efficiency, reducing bills and reducing your carbon footprint (what’s not to like?).
This year Minimum Energy Efficiency Standards are being enforced on rented properties, this means landlords are looking to improve the quality of houses and retrofit is presently the cheapest option for this. Changes to the privately rented housing stock should make an impact on the coming fuel poverty trends.
Yet the biggest worry now is the effect the COVID-19 pandemic will have. This year BEIS has decided not to publish projections for 2020 due to the unprecedented nature of the ongoing pandemic. Household incomes have dropped, people are spending more time at home and we as a country will have a large proportion of people recovering from a respiratory disease. The country has seen the biggest increase in benefit applications ever, and increased reliance on food parcels. This will mean that some people will find them in situations they have never been before and will not know what support is available to them, many of the people entering fuel poverty will be from backgrounds where they have never had to ask for help.
It is difficult to take assistance when you have previously been the one to give it – but we hope people will know Warm and Well and the other energy agencies across the country are not offering charity but a cut of what the energy companies are obliged to give to those in need. Everyone may need to be a bit more savvy and frugal in the coming year, but if you need any support, or perhaps just some advice, call our friendly advisors on 0800 500 3076