Cold and Poor: An Analysis of the Link between Fuel Poverty and Low Income

Author:
Organisation:
New Policy Institute
Date: 2008

Rationale

It is widely accepted that a close association exists between low income and fuel poverty and that policies designed to raise (or maximise) income and tackle poverty will benefit fuel poor households. Nonetheless, the exact relationships are not well known. Current policy on fuel poverty primarily focuses on energy efficiency measures, with little consideration of the role of income, while anti-poverty strategies largely omit fuel poverty. This has significant implications for future approaches, particularly so at a time when charges for domestic fuel are increasing rapidly. 





Key research Question

The study was developed in order to understand the interplay between fuel poverty, income poverty and other aspects of deprivation and to identify which types of household are more at risk of fuel poverty and why, with a view to informing the development of policy. 



Summary of activity

The research drew upon and analysed data from the UK government fuel poverty datasets. These data are underpinned by the official ‘full income’ definition of fuel poverty and the ‘before deducting housing costs’ measure of income poverty. It also accepts other relevant criteria, such as estimated required fuel costs. 



Methodologies



Findings

Between 2005 and 2007, rising domestic energy prices appeared to be decoupling the link between low income and fuel poverty, in that it became possible for a household to be in fuel poverty whilst in receipt of income well over accepted thresholds for financial vulnerability. Consequently, it is predicted that anti-poverty strategies will have a reduced impact on fuel poverty. 

In general, living in an area of deprivation is not a risk factor for fuel poverty, which cautions against using this as a guide for interventions designed to reach fuel poor households. The main groups at risk are single-person households (both working-age and retired) and rural households. The risk is exacerbated if they are income poor, but these groups are not targeted in anti-poverty or fuel poverty strategies.  

The data suggest notable differences between England, Scotland, Wales and Northern Ireland, with much greater risks for older singles and pensioner couples in Scotland and Northern Ireland and rural households in Scotland, Wales and Northern Ireland, though there are problems with comparability of data. 

Official definitions of those vulnerable to fuel poverty are too wide and do not allow the identification of those most at risk.  



Recommendations

  • UK government policy on fuel poverty must recognise the critical factor of income poverty among both single-person households of working age and the rural poor. 

  • The definition of a vulnerable household used in the UK’s Fuel Poverty Strategy should be amended to refer to any household where someone is receiving state benefits. 



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Outputs







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