An Assessment Tool for Low Income/High Costs (LIHC) Fuel Poverty (Three-stage Project) Research Report to the Joseph Rowntree Foundation, Citizens Advice, National Energy Action and EAGA Charitable Trust

Author:
Organisation:
Jointly funded by the Joseph Rowntree Foundation
Citizens Advice
National Energy Action and EAGA Charitable Trust
Date: 2017
Location:

Rationale

Given the need to demonstrate progress in tackling fuel poverty, having access to a statistically sound evidence base that can both map fuel poverty and assess the impact of interventions is vital. However, calculating whether a household is in fuel poverty has proved methodologically challenging on a number of levels, and defining an agreed threshold has also been problematic. In 2012, a new fuel poverty indicator for England was introduced following the recommendations of the Hills Review. Called the low income/high costs (LIHC) fuel poverty indicator, it allowed thresholds to change annually to reflect changes in income and fuel costs. Previous attempts have been made to develop analytical tools that would allow practitioners to calculate fuel poverty and model the impact of various measures. However, the different model adopted by the LIHC indicator means that a revised process may be needed to assess progress. 





Key research Question

The researchers investigated whether a modified tool could be developed that would meet both the demands of the LIHC indicator and those of stakeholders for locally relevant, consistent data. In conjunction, they monitored what technical learning could be shared with other toolkits and explored the robustness of data underpinning the LIHC indicator and what adjustments, if any, could be made to improve its accuracy. This study was an update of the earlier Stage 2 report by the same authors, which was also titled ‘An Assessment Tool for Low Income/High Costs Fuel Poverty’. 



Summary of activity

The tool used a range of statistical data inputs, including occupancy rates, the age, surface area and condition of properties, household incomes, fuel costs and geographical location, to calculate fuel poverty risks. It was available as a software package or a web-based tool. 



Methodologies



Findings

The updated tool did generate more accurate calculations, enabling the official LIHC indicator to be refined to improve the targeting of the most fuel poor homes. As such, it meets the first four criteria set out by the UK government (area-based, doorstep, verification and database tools) for targeting fuel poverty. Nevertheless, it has notable limitations. 

Although the LIHC indicator’s approach of focusing on low income and high fuel cost thresholds for fuel poverty is an improvement on the historical ‘10% of income’ marker, it suffers from serious methodological shortcomings with regard to its underlying data. 

The objectives, principles and basic methodology adopted in the analysis can be applied equally to other definitions of fuel poverty. 

Many more bypassed groups are identified, and the use of these data could substantially reduce the resources needed to assess LIHC fuel poverty in large housing surveys.  



Recommendations

  • More work is needed to develop the tool’s technical potential. 

  • The current methodology underlying the LIHC should be replaced with a new approach that combines an innovative application of the Minimum Income Standard and a household-based energy efficiency rating, which would offer a more streamlined but also more precise assessment.  

  • The UK government should implement changes in the process of collecting and sharing datasets. For example, the English Housing Survey (EHS) should be modified to capture additional data on Energy Performance Certificates (EPCs), or its current system should be adjusted so that data can be matched with those obtained from existing EPCs. The Department for Business, Energy and Industrial Strategy and Buildings Research Establishment should ensure that EHS datasets are published in the standard file format used in the Reduced Data Standard Assessment Procedure (XML) in order that the reproducibility of their results can be tested.  



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