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Fuel poverty

As the colder, winter months approach increasing fuel costs is a worry for many households.

The latest government survey shows that in 2018 the proportion of households in fuel poverty stood at 2.4 million households making up 10.3% of households in England. And when looking at the UK as a whole the charity, National Energy Action, estimates that around 4 million UK households are facing fuel poverty.

This can be a huge concern for many people and if you're struggling with energy bills there are options out there to help manage fuel consumption and pay towards increasing costs.

What is fuel poverty?

In England, households are considered in fuel poverty if they meet two criteria:

  • the required fuel costs are above average
  • if they were to pay the required fuel costs it would leave a residual income that would put the household below the poverty line

From these factors, an average fuel poverty gap is calculated estimating the reduction in energy bill needed to remove a household from fuel poverty.

In 2018, the average gap was £334, an increase of 1.9% compared to 2017. This means energy bills would need to decrease by £334 to stop a fuel poor household from falling below the poverty line.

What causes fuel poverty?

For a household to be considered fuel poor depends on the following key factors:

Energy prices - in recent years the energy price cap has helped protect households against unfair rises in energy costs. The cap is subject to change pending review by Ofgem twice a year and is currently set at £1,042 per year for a household that is on a standard variable or default tariff.

The price cap doesn't protect you from price fluctuations, so consider a fixed rate plan to secure the price you pay. At the time of the latest price cap review, savings of up to £305 per annum could be achieved by moving away from a default tariff to a cheaper deal.

Energy efficiency - households with poor energy ratings will be less energy efficient and will need to spend more to keep houses warm due to waste.

Household income - those with lower incomes may need to spend a larger sum of their budget on energy needs, putting them at risk of falling below the poverty line.

What are the effects of fuel poverty?

Fuel poverty primarily affects vulnerable households including people:

  • on low incomes
  • with dependents under 16
  • who are disabled or have a chronic illness
  • in old age

These households can struggle with both physical and mental health problems, ranging from respiratory and circulatory illness through to psychological stress and isolation. National Energy Action estimate that over 125,000 people may die prematurely due to cold homes throughout the UK. Children are also susceptible to conditions such as asthma and bronchitis.

Where low incomes are concerned, some households will also struggle with whether to heat their home appropriately and fall into debt or reduce their energy consumption and risk ill health. Others will spend more on fuel costs than food.

The government have introduced energy price caps and increased the National Living Wage in recent years to help combat the issue with fuel poverty. Further work is needed on increasing the energy efficiency rating in homes which the government is working towards rising steadily.

How to get help with fuel poverty

If fuel costs are starting to become a worry, you've missed a payment or are at risk of missing one, then your first stop is to contact your energy supplier and raise any concerns with them. They will be able to offer advice and discuss ways to manage your payments.

If you are still struggling with payments the government also provides the following schemes:

  • Winter fuel payments - you could be eligible for anything between £100 - £300 to help pay towards heating bills
  • Cold weather payments - this scheme gives eligible people £25 for each 7 day period where the average temperature is recorded, or forecast, to be zero degrees or below.
  • Warm home discount scheme - if eligible you could receive £140 off your electricity bill between September and March

Remember that comparing energy providers can be a good way to find cheaper deals that are best suited for your usage. Use our energy deals comparison tool for a quick and easy way to find out exactly how much you could be saving.

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