Energy crisis: What is fuel poverty?

CONWY, UNITED KINGDOM - NOVEMBER 06:  In this photo illustration an old age pensioner keeps warm with the aid of an electric heater on November 6, 2008, in Conwy, Wales. With the recent high rise in fuel and energy bills many senior citizens are facing a cold winter. The UK's National pensioner Convention has called for a higher basic state pension for the over 60's.  (Photo by Christopher Furlong/Getty Images)
It is estimated over 3 million households live in fuel poverty (Getty)

With households facing soaring energy bills in the coming months, campaigners have warned that millions of families are facing fuel poverty this winter.

It comes amid rising inflation and a cost of living crisis for England, as energy shortages push up the price of food and other essentials.

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At the same time, the cancelling of the £20 uplift to Universal Credit means that some of the country's poorest households are already seeing their income squeezed.

Charities, including the End Fuel Poverty Coalition, have warned the government that the escalating problem of fuel poverty risks undermining their agenda of "levelling up".

Watch: What is Universal Basic Income?

What is fuel poverty?

Fuel poverty refers to the cost of gas and electricity for heating a person's home and does not apply to fuel for other needs, such as cars.

Fuel poverty in England is now measured using a measure called the Low-Income Low Energy Efficiency (LILEE).

Under this scheme, a household is considered to be fuel poor if they have required fuel costs that are above average, and they would be left with a residual income below the official poverty line if they were to spend that amount.

Fuel poverty is therefore affected by a household's overall income, plus how energy inefficient their home is.

Where is fuel poverty most common?

Fuel poverty is highest in the West Midlands, where 17.5% of households are in fuel poverty, and Yorkshire and The Humber (16.8%).

The South East has the lowest rates of fuel poverty, with 7.5% of households affected.

Proportion of fuel poor households - Annual Fuel Poverty Statistics in England, 2021 (2019 data)
Proportion of fuel poor households - Annual Fuel Poverty Statistics in England, 2021 (2019 data)
2021 report
Proportion of fuel poor households - Annual Fuel Poverty Statistics in England, 2021 (2019 data)

Birmingham Hodge Hill is the constituency that has the highest levels of fuel poverty in England at 27.4%. In this area, around 70% are predicted to be hit by the cuts to Universal Credit this month.

As well as fuel poverty being more likely to affect people in metropolitan areas, it is also more likely to affect people of colour, according to the Department of Business, Energy and Industrial Strategy.

What causes fuel poverty?

Fuel poverty is caused by a variety of factors, such as earnings being below the poverty line after energy bills have been paid, energy efficiency, and energy prices.

Soaring energy bills this year are likely to exacerbate the issue, with consumer experts expressing concern that there is very little people can do to reduce their costs as the energy market crisis continues.

How many people are affected?

In 2019, there were an estimated 13.4% of households (3.18 million) in fuel poverty in England.

Fuel poverty campaigners, End Fuel Poverty Coalition, say their data suggests rising fuel costs and a rise in the fuel cap could push the number up to an estimated 4.1 million.

Nine energy companies in the UK have gone bust since September due to rising global gas prices, leading to calls from the industry to increase the £1,277 energy bills cap to be increased significantly in spring 2022.

“The latest rises in wholesale prices means that we face the possibility of more households facing fuel poverty than ever before," said Simon Francis, co-ordinator of the campaign.

Is there any support if you live in fuel poverty?

There are some mechanisms people can draw upon if they are living in fuel poverty.

The Winter Fuel Payment is available to people who claim pension credit, and Cold Weather Payments are available to people on certain benefits if your area falls below 0C seven days in a row.

If your electricity supplier is in the Warm Home Discount scheme and you get the guarantee part of Pension Credit, or you are on low income and meet the company's criteria, you are eligible for a £140 discount on your electricity bill.

There have been calls for The Warm Home Discount to be increased to help poorer people affected by soaring energy bills as winter approaches.

Sir Ed Davey, leader of the Liberal Democrats, said doubling the discount would be an effective way of supporting people through the energy crisis.

Last week, shadow business secretary Ed Miliband accused the government of being " in denial" about the scale of the crisis.

"The prime minister’s speech yesterday was that of someone living in a parallel universe - in denial about the crisis facing Britain’s families and businesses," he said.

Watch: Fuel poverty warning as price cap goes up at time of 'chaos' for economy