rethinking fuel poverty in the uk february 2012 donald hirsch
TRANSCRIPT
Rethinking fuel poverty in the UK
February 2012
Donald Hirsch
Fuel poverty: three perspectives
The poverty perspective
• Problem: high fuel costs stress family budgets• Focus: low income households
Fuel poverty: three perspectives
The health perspective
• Problem: unaffordable fuel costs create cold homes• Focus: groups not heating houses properly
Fuel poverty: three perspectives
The environmental perspective
• Problem: poor housing stock uses fuel wastefully• Focus: thermally inefficient homes
Fuel poverty: three perspectives
The poverty perspective
The health perspective
The environmental perspective
CORE DRIVERS
• HOUSEHOLD INCOME
• FUEL EFFICIENCY OF
HOMES
An underlying concept
Fuel poverty means living in
“a household living on a lower income in a home which cannot be kept warm at reasonable cost”
Warm Homes and Energy Conservation Act 2000
Key measurement issues
• What is the threshold of low income?• What do we mean by reasonable cost?• How to combine these?
Current definition
Fuel poverty =
having to spend at least 10% of income on fuel to keep home warm
Current definitionProblem 1: It doesn’t measure affordability
Fuel poverty line (10% of income)
Available for non-fuel spending
Needed for fuel
Income
SpendingTotal income/spending
Current definition
Problem 2:
Why 10%?
Should the threshold change with changing norms?
Current definition
Problem 3:
What is adequate warmth?
15 16 17 18 19 20 21 22 23 24DEGREES CENTIGRADE
Living room standard
Non-living room standard
“no demonstrable risk” - WHO
Average centrally heated homes
Risk of respiratory problems (where humidity not optimal)
Redefining fuel poverty – low income, unreasonable fuel costs
Income
Fuel costs*
60% median income
*”Fuel costs”= required fuel spending
High fuel costs
Low Income
Redefining fuel poverty – low income, unreasonable fuel costs
Low income
High fuel costs
60% median income after fuel costs
Redefining fuel poverty – low income, unreasonable fuel costs
Low income
High fuel costs
60% median income after fuel costs
Median fuel costs
Fuel poverty
Issues arising
1. Do rising fuel prices cause “fuel poverty” to rise proportionately?
2. What level of fuel efficiency is taken as “reasonable”?
3. What are the actual consequences of fuel poverty, for material hardship and for health?
Consequences 1: fuel pre-empts family budget
Risk of spending high proportion of income* on fuel
*At least 10% of disposable income (after housing costs)
Income poor
Not income poor
Fuel poor Not fuel poor(old definition)
60%
5%34%
85%
Risk of spending high proportion of income* on fuel
*At least 10% of disposable income (after housing costs)
Hardest hit: Lone parents• Low average family income• High priority on meeting family needs
Consequences 1: fuel pre-empts family budget
Risk of low fuel spending* as a % of requirement
*Below 40% of requirement to meet temperature norm
Income poor
Not income poor
Fuel poor Not fuel poor(old definition)
12%
19%46%
43%
Consequences 2: fuel spending low relative to need
Risk of low fuel spending* as a % of requirement
*Below 40% of requirement to meet temperature norm
Consequences 2: fuel spending low relative to need
Hardest hit: Single people (pensioners and non-pensioners)• More likely to have high relative fuel costs• More likely to spend less than “need”
• Spending too little to heat an expensive home is not always linked to poverty (eg single pensioners)
• Many families in poverty spend a high proportion of income on heating, regardless of fuel efficiency
• Rising energy prices spread the problem
• Targeting the housing stock will not always reach people in greatest need
• Measures that target by income and housing efficiency may be best.
Conclusion: five key observations
Centre for Research in Social PolicySchofield Building
Loughborough UniversityLoughboroughLeicestershire
LE11 3TU
Telephone: +44 (0)1509 [email protected]
www.minimumincomestandard.org