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Patterns of Fuel Poverty

In April 2022 the energy price cap was raised by a massive 54%, pushing an estimated 6.2 million households into fuel poverty.

Fuel Poverty 1

The situation is about to get worse!

In October there will be another round of fuel price increase, which could see annual household energy bills climb above £2000. That will plunge a further 2.2 million households into fuel poverty. See below.

Fuel Poverty 2

Moreover, the fuel poverty gap which was £223 in 2020 will be much larger when official figures for 2022 are finally released.

A result, the CEO of energy supplier E.on forecasts nearly 40% of UK households will be in fuel poverty in 2023, if nothing is done to help households with their energy costs.

DEFINITIONS

  1. Fuel poverty: A household is said to be in fuel poverty if they have required fuel costs that are above average and were they to spend that amount they would be left with a residual income below the official poverty line.
  2. The energy price cap: Sets a limit on the price suppliers can charge for gas and electricity. It is reviewed every six months. In April 2022 the price cap was raised by 54%.
  3. The poverty gap: The difference between a household’s average bill and what their bill would need to be for them to no longer be fuel poor.

A perfect storm

Household are in fuel poverty when a number of elements come together.

  • Low incomes.
  • A rapid increase in energy costs.
  • Households with poor energy efficiency.
  • Unaffordable home ownership.
  • Poor quality private rental housing.

This is exactly the case at the moment. According to End Fuel Poverty Coalition, nearly half of low-income households are still living in energy inefficient homes. Add to that increases in fuel prices are likely to hit those on low incomes hardest because fuel costs take up such a significant percentage of their disposable income.

Recent research from the Jacob Rowntree Foundation found that, energy bills would amount to:

  • 6% of the average income of a middle-income family.
  • 18% for a low-income family.
  • 25% for lone parents and couples without children.
  • Up to 54% of their income on gas and electricity for single-adult households on low incomes.

Added to that, older households in the lowest income decile will see energy costs rise to 18% from April 2022. (Age Concern)

Is there a geography of fuel poverty?

1. It’s a simple question. Is there a pattern to fuel poverty, and is it a regional pattern? At first glance the answer would appear to be yes. See below:

Patterns of fuel poverty (Source: ONS)

Region (England only)

% neighbourhoods in fuel poverty

West Midlands

41

Yorkshire and Humber

35

North East

26

London

25

North West

24

East Midlands

20

East of England

15

South West

4

South East

1


Areas most affected by fuel poverty are by and large the old industrial regions, and other areas in need of “levelling up”, While the South East, the South West and to some extent East Anglia fare much better, with the exception of London. More on that later.

2. Drilling down to local authority level (see table below) the regional pattern shown above, repeats itself up to a point. But the pattern is becoming more nuanced. It becomes clear that some local authorities (LAs) are particularly badly affected:

a) London stands out with three LAs in the worst 5.

b) The West Midlands account for around one third of the worst performing Las.

c) Plus, there are representatives from Yorkshire and Humberside, The East Midlands and the North West.

d) However, notice that Kings Lynn and West Norfolk (a rural area) also features in the table.

Fuel Poverty worst affected local authorities (Source: Friends of the Earth)

Local Authority

Region

% of neighbourhoods in fuel poverty

Newham

London

73

Stoke on Trent

West Midlands

69

Barking and Dagenham

London

68

Wolverhampton

West Midlands

65

Waltham Forest

London

64

Sandwell

West Midlands

61

Manchester

North West

59

Birmingham

West Midlands

59

Hull

Yorks and Humber

53

Leicester

East Midlands

53

Walsall

West Midlands

53

Haringey

London

50

Norwich

East of England

49

Kings Lynn

East of England

48

Barnsley

Yorks and Humber

47

Nottingham

East Midlands

47

What the majority of these LAs have in common is that they are part of city regions. And it is these areas typically where you find most of the communities deemed “left behind” by the government.

3. Friends of the Earth have produced an excellent interactive map detailing the pattern of fuel poverty across England which can be accessed here: https://mapst.ac/foe/fuel-poverty#6.17/53/-2.75.

What this shows is that the pattern of fuel poverty has more of a patchwork quality about it, not dissimilar in many respects to patterns of multiple deprivation across the UK.

a) In the old industrial heartlands.

b) In rural areas.

c) In and around our major cities.

So, it looks like there are identifiable patterns. What then, are the factors which might be helping to create these patterns?

a) Fuel poverty and multiple deprivation. The link between the two would seem to be obvious. Low income and fuel poverty are linked. Low income is a component of deprivation. So logically there should be a (strong) correlation between fuel poverty and the index of multiple deprivation.

Surprisingly perhaps very little research seems to have been carried out in this field, so evidence is sparse. However, a research paper published by the University of Sheffield in 2019, throws some light on the relationship. Using a series of correlation coefficients, it finds that correlation between fuel poverty and multiple deprivation varies across the regions of England:

  • It is strongest in the North east and the Midlands.
  • It is weakest in London.
  • There exists a broad range of correlations from strong to non-existent across all major cities.
  • At Local Authority level there are some neighbourhoods with strong correlations and others with weak correlations.

There are clearly other factors at play. Using government data, Friends of the Earth have produced a report which highlights the following:

  • Young people are more likely to live in fuel poverty than older people. 25% of households in the youngest age bracket (16-24) are deemed to be fuel poor, compared to 11% for 60-74-year-olds.
  • It is also more likely to affect people who rent their homes over those who own them. Only 8% of privately owned homes are considered to be in fuel poverty.
  • 27% of privately renting households are considered fuel poor, compared to 18% for social housing.

In addition:

  • People of colour are twice as likely to live in an “E-rated neighbourhood” (those with greatest propensity to be fuel poor) as white people (38.9% compared to 17.5%).
  • Neighbourhoods with a high proportion of people with Health and Disability challenges also tend to have a high proportion of households in fuel poverty.

Conclusions

  1. The causes of fuel poverty are complex, which suggests a once size fits all approach to addressing the problem is unlikely to work.
  2. The drivers of fuel poverty vary not only regionally but also within regions.
  3. Low income is clearly a factor as is the need to either control or reduce the impact of rising energy prices.
  4. However, there needs to be an increased focus on energy inefficiency. What stands out a mile is that a significant proportion of privately rented housing is not maintained at the required level, and that private landlords must be encouraged to do more to make their properties energy efficient.

Which leads on to this...

Young people are highly unlikely to qualify for renting social housing. They are more likely to be in private rented accommodation, particularly in major cities like London, because for many home ownership is unaffordable. This may explain the high percentage of young people in fuel poverty, as a result of the inadequate or fuel inefficient properties they occupy. This despite their relatively high incomes, because their income is offset by high rental costs.

At the same time the stock of social housing is much less than it was. Public housing owned and managed by local authorities, (council housing) reached a post war peak of 32% of the UK housing stock. By 2018 this had dropped to 8%, with the huge loss of 4.5 million council homes since 1979 (The Meteor).

As a result, low-income households are also forced into privately rented accommodation much of which, as we have seen, is fuel inefficient.

The answer would seem to be either:

  1. Build more social housing (unlikely unless there is a change of government).
  2. Introduce stringent measures to ensure privately rented accommodation is upgraded to become more fuel efficient.

Why does it matter?

a) The poorest are hit hardest by fuel cost increases. Spending on energy varies less by income than any other spending category. This means lower income households have to spend a much larger share of their family budgets on energy than higher income groups. So, increases in energy prices will have a greater impact on lower income households. Recent and expected price rises in 2022 suggest that it would cost the poorest 20% of households an additional £850-950 to use as much energy in 2022-23 as they did in 2019-20.

b) Fuel poverty has a negative impact on our health.

  • There is “clear evidence on the links between cold temperatures and respiratory problems.” Including the worst effects of COVID-19. (Public Health England)
  • Damp and mould are associated with a 30-50 per cent increase in respiratory problems. (Ruse & Garlick, 2018)
  • Reducing preventable ill health arising from cold homes will be vital in protecting NHS and care services.
    • Fuel poverty costs the health service £3.6 million every day. (Kingston)
    • The average number of excess deaths experienced in the UK each year between December and March as an indirect result of fuel poverty is 32,000; more people die from cold homes than they do alcohol, Parkinson’s Disease or traffic accidents.
    • 11,400 winter deaths can be linked to cold homes. (NEA)
  • Fuel Poverty can also lead to people taking days off work as a result of sickness. (IPPR). (Source: End Fuel Poverty).

By Phil Brighty

Former Geography Teacher

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