Failing to insulate – a double threat of fuel poverty and climate harm

There’s a price to pay for decades of underfunding energy efficiency improvements to the UK’s older and badly insulated houses. And the price is causing harm to the poorest in society, pensioners, people of colour, young people and people with health and disability challenges. These communities suffer disproportionately from fuel poverty and the impact of climate breakdown, which is exacerbated by inefficient, energy-hungry homes.

Mike Childs22 Nov 2021

What is fuel poverty?

The definition of fuel poverty has changed over time. The current definition in England, introduced this year, is that households are fuel poor if they are in poverty after fuel costs (i.e. they have less than 60% median disposable income remaining once they’ve paid their energy bills) and live in a household with low energy efficiency (EPC rated D or less). The government accept that their new definition will not capture all of those in fuel poverty, for example, those in poverty but in well-insulated homes.

Nor does their definition consider housing costs. According to the latest statistics, there are 12.2 million people in poverty after housing costs and 9.4 million in poverty if housing costs are ignored, although it’s expected these numbers will increase by more than 1 million people due to the withdrawal of the Universal Credit uplift. 19% of households where the head of the household is White are in poverty after housing costs, whereas 40% of households are in poverty where the head of the household is a person of colour. 

The government’s statistics will therefore be an underestimate of the real level of fuel poverty. 

Where is fuel poverty worse?

The government data on fuel poverty by neighbourhood is only available for England. It is imperfect data due to small sample sizes but it's the best there is. The data gives estimates of levels of fuel poverty by neighbourhood. The geographical boundaries for each neighbourhood are Office of National Statistics Lower Layer Super Output Areas (LSOAs) which have an average population of around 1700 people. Friends of the Earth has allocated each neighbourhood to an A-E rating, with each representing a quintile of the data and with A-rated neighbourhoods having the lowest levels of fuel poverty and E-rated having the highest. Our data analysis reveals a clear geographical difference in fuel poverty levels, as the table below shows.

The local authority areas that are most impacted are in the table below. Or dive into more of the data by:

 

Who is most affected by fuel poverty?

Our analysis shows that people of colour are twice as likely to live in an E-rated neighbourhood as white people (38.9% compared to 17.5%). This is broadly in line with the difference in poverty levels (40% compared to 19%).  

We also show that neighbourhoods with  a high proportion of people with Health and Disability challenges also tend to have a high proportion of households in fuel poverty.

Fuel poverty vs health deprivation and disability

Government data also shows young people are more likely to be fuel poor than old people. 25% of households where the oldest member is aged 16 to 24 years were fuel poor, compared to 11% for 60 to 74 year-olds. And the issue affects people in rented housing more than those who own their homes. 27% of private rented sector homes are in fuel poverty compared to 18% for social housing and 8% for owner-occupied homes.

What's the impact of fuel poverty?

In 2011 Friends of the Earth commissioned highly respected Professor Marmot and his Marmot Review Team at the Institute of Health Inequalities to identify the  direct and indirect health impacts suffered by those living in fuel poverty and cold housing. 

The report was clear that cold homes affect the health and wellbeing of people of all ages and that there is a strong relationship between cold temperatures, cardiovascular and respiratory diseases. Children living in cold homes are more than twice as likely to suffer from a variety of respiratory problems than children living in warm homes.  

It also found that more than 1 in 4 adolescents living in cold housing are at risk of multiple mental health problems and that cold housing negatively affects children’s educational attainment, emotional wellbeing, and resilience. 

Investing in eradicating fuel poverty therefore brings reductions in future health service costs and has further benefits for the economy by increasing skills, such as retrofitting insulation or fitting heat efficient doors and windows.  

How to fix fuel poverty

The government’s fuel poverty strategy for England has set a target to eradicate fuel poverty by 2030. This is a commendable target, although obviously the earlier the better. The table below shows that the number of fuel poor households has declined a lot already over the last 10 years, using the government’s latest metric. But it is still very high.

Mostly this is about money, but regulation has a significant role. 

The government will consult on requiring landlords in the private-rented sector to bring their homes up to a decent energy efficiency standard by 2028. A third of fuel poverty households in England live in private-rented sector homes. This measure is therefore welcome, although we will need to watch out for loopholes and caveats when the proposed policy is published. It will also be important to introduce safeguards (e.g., rent control and security of tenure) to prevent landlords from putting rents up or evicting tenants when the work is done. Local authorities will also need the resources to carry out their policing function, otherwise unscrupulous landlords will try to slip through the net.  

But that still leaves two-thirds of the fuel poor needing help.  

Local authorities have also been allocated funds for housing insulation through a Local Authority Delivery Scheme of £500 million to update 50,000 homes and a £1.1 billion Home Upgrade Grant to spend between 2022-25. The Home Upgrade Scheme is £1.4 billion short of what the Conservatives promised in their election manifesto. There is also only £800 million for social housing out of a promised £3.8 billion between 2020 and 2030. 

Between 2022 and 2026 the major energy retailers will also need to spend £1 billion a year between them on installing energy efficiency measures for homes in fuel poverty. Local authorities can refer households to this scheme. 

Far less government funding than promised

This sounds like a lot of money (some of which can be used by private-sector landlords). But there are 3.2 million households in fuel poverty. According to the English Housing Survey, the average cost of bringing a private-rented home up to standards is £7,646, and £8,579 for a privately-owned home, with £5,979 for social housing. A ballpark estimate using the £7,646 figure as an average is that £24.5 billion is required (although the cost would be considerably lower if it were a coordinated local authority street by street programme).

There is still therefore a gaping hole in the finances, even if all the rented-sector home upgrades are paid for by the landlords. And this excludes monies needed to help non-fuel poor households upgrade their homes.

Polluters should pay and stop profiteering off fuel poor

One route for obtaining some of the cash needed for this work and for immediate financial help for people who can’t heat their homes is to levy a Windfall Tax on the fossil fuel companies whose profits are currently surging as a result of high gas and oil prices, which are forecast to remain high until next summer. A Windfall Tax was deployed by the Blair Government in 1997 across a number of privatised utilities and raised £5 billion, but the approach has been supported across the political spectrum with John Major proposing its use in 2013. Energy Minister Kwasi Kwarteng has not ruled out the measure after Spain recently introduced a Windfall Tax. The advantage of the tax is that it adheres to the ‘polluter pays’ principle and penalises profiteering off the backs of the fuel poor. It’s a measure proposed by the grassroots Fuel Poverty Action and supported by Friends of the Earth.

There’s also a need to ensure householders can trust builders fitting energy efficiency measures. The Citizens Advice Bureau has called for a Mandatory Accreditation Scheme and Inspection Body for energy efficiency installers. Fuel Poverty Action has called for accountability to residents, including strengthened tenants and residents associations, enforceable guarantees, legal aid,  and a golden thread of responsibility for energy efficiency retrofits as for fire safety. 

Eliminating fuel poverty is an important goal, and energy efficiency must be central to that because without it, climate goals will not be met and the most vulnerable will be harmed the worst. But it will take time and will not help most fuel poor this winter. Therefore, we also support the call by fuel poverty charity NEA for the Warm Home Discount Scheme (WHDS), which gives the fuel poor lower-cost energy, to be extended to 3 million more households and for it to be more generous.

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