Select Committee on Trade and Industry Sixth Report


1. We undertook in the course of our recent inquiry into Security of Energy Supply[1] to investigate fuel poverty and what could be done to alleviate it, particularly in the light of the Government's new UK Fuel Poverty Strategy, published in November 2001. We have received 25 memoranda from a range of interested organisations and taken oral evidence from Energywatch; the Electricity Association; Energy Action Scotland, the National Energy Action Charity and the National Right to Fuel Campaign; the Fuel Poverty Advisory Group; Mr Michael Meacher MP and Mr Brian Wilson MP, Ministers at the Department of Environment, Food and Rural Affairs and the Department of Trade and Industry respectively; Ofgem; and Transco. We are grateful to all those who assisted us so generously with both their time and expertise.

2. At the core of the Government's UK Fuel Poverty Strategy (UKFPS) document is a commitment to end fuel poverty for vulnerable groups (older householders, families with children, and disabled and long-term sick householders) by 2010, after which other households will be tackled.[2] The strategy defines a fuel poor household as one that cannot afford to keep adequately warm at reasonable cost, and which would need to spend more than 10 per cent of its income on fuel use to heat its home to the standard of warmth recommended by the World Health Organisation.[3] Fuel poverty can damage quality of life and health and impose wider costs on the whole community. It increases the likelihood of ill heath and exacerbates illnesses such as influenza, heart disease and strokes, in turn contributing to excess winter deaths[4] and leading to enforced absences from work. Certain chronic conditions linked with fuel poverty also restrict choices of potential employment. The need to spend a large portion of income on fuel restricts choices about other household essentials and can lead to poor diets and/or withdrawal from the community.[5]

3. Three elements contribute to the creation of fuel poor households: the amount of fuel required to heat the home to WHO standards; the cost of that fuel; and the income of the household. At its simplest, there are therefore three ways to reduce and eventually eliminate fuel poverty: by improving the energy efficiency of the housing stock and therefore reducing the amount of fuel required; by reducing fuel costs; and by increasing household income. Essentially what has been happening for several years is a combination of the last two, with the result that, as far as can be judged in the absence of entirely robust data, fuel poverty is decreasing. The questions we set out to address are whether this trend can continue and whether there are better ways of ensuring it does so.

The problems of definition

4. Energywatch told us that the important thing was to have a consistent target, and then concentrate on achieving it:

We are pleased to note that the Government will indeed focus on outcomes "where data is available to do so readily" and that further possibilities for improving data will be investigated.[7]

5. To our dismay, we became somewhat bogged down in definitions of the problem from the start. There are subtle distinctions in the definition used of a household in fuel poverty between England, Scotland, Wales and Northern Ireland: most notably whether Housing Benefit and Income Support Mortgage Interest (ISMI) are included in the calculation of total household income. (They are included in England and Scotland but not in Northern Ireland and the definition expected in Wales is also likely to exclude these.) Another area where consistency across the UK is lacking is whether fuel use relates only to heating or to all household fuel (the definition in Scotland is just "heating" but in England and Northern Ireland it is "fuel").[8] Flexibility of approach in terms of finding solutions to address the problem is a strength, but variation, however small, in defining the problem is not. Nor is it likely to help that in England two definitions (one including and one excluding Housing Benefit and ISMI) are to be used for production of figures. An already complex issue which, for good reasons, demands a flexible and multi-pronged approach if the Government's targets are to be met, needs more clarity.

6. We received a number of representations that the definition of fuel poverty should exclude housing costs.[9] Mr Meacher told us that if such a definition were adopted:

    "you get the slightly anomalous result of including people on relatively higher income — these are still low incomes — who will have more expensive and presumably bigger houses with the result that using the 1996 data up to one third of all households might be classified as being in fuel poverty. I would suggest that is rather counter-intuitive".[10]

We are not in a position to conclude which definition of fuel poverty is the "best". However, whether or not the results produced appear to be counter-intuitive, we need to be confident that the definitions being used are appropriate and robust. Under-occupation presents a particular challenge in this respect, and means must be found to recognise that a single, low income occupant of a larger home is not only probably in fuel poverty but also requires assistance even where he or she is not in other respects an obvious candidate for it. There may well be an argument for refining definitions so that it is easier to focus on those who are most vulnerable, but essentially the ten percent of income figure is itself arbitrary. Nevertheless, we sympathise with Mr Meacher's evident impatience at what doubtless at times seems an unnecessary focus on peripheral issues of measurement and definition:

    "We have committed ourselves. The two Departments, the two Ministers have absolutely made a commitment to end fuel poverty by 2010 for vulnerable households, those who are elderly, those who are disabled or long-term sick, those who are on low incomes with families. That accounts for about 85 per cent of all the fuel poor. That is a commitment which we have clearly made. That is the important point. How we achieve it by this combination of different schemes is a matter which can be left to us. It is our commitment to achieve it which is fairly important."[11]

7. We agree that the Government has taken an important step in addressing the issue of fuel poverty and applaud the commitments it has made. But we cannot agree that the aim of reducing fuel poverty is the only important issue: what if, at the end of the decade, we discover that fuel poverty has been ended but at a cost to the public purse of ten times more than was actually necessary? Or if fuel poverty could have been ended, but was not for lack of relatively small amounts of funding? If it is impossible to measure with any accuracy the problem, or the degree to which solutions work, how can we know not only whether, ultimately, the Government has achieved its objective but also whether it has done so in a cost-effective manner?

8. Another concern which was raised with us is that of the anomaly that receipt of or eligibility for benefits is used as a proxy for fuel poverty, which fails to acknowledge an entire section of the fuel poor: those people not in receipt of any benefits, for example single people on low incomes, most often living in private rented accommodation in conditions which would simply not be permitted in the socially housed sector.[12] Post 2010 the plight of these groups, for the most part labelled "non-vulnerable", will have to be faced squarely. The limited evidence we received on this area suggests that identifying and helping these people may prove a far more intractable problem than dealing with fuel poverty among many of the more obviously vulnerable sections of society.

Particularly vulnerable groups

9. It is important that in the short- to medium-term, as many as possible of the groups particularly vulnerable to fuel poverty are assisted. Mobility impaired disabled people are clearly a group who are not only more likely to suffer from fuel poverty because of their greater need for heating and, often, lower income level, but also have a greater susceptibility to the ill effects, both health and social, associated with fuel poverty. These problems extend beyond those eligible for disability benefits: for example many elderly householders with chronic health conditions are not disabled as such but are sufficiently immobile to be vulnerable to cold homes. The Winter Fuel Payment has been of benefit to pensioners in this vulnerable group. We urge the Government to look at extending this payment to other vulnerable groups.

1   Published as the Committee's Second Report, HC 364 of Session 2001-02-hereafter referred to as "Second Report" Back

2   UKFPS, para 2.1 Back

3   UKFPS, para 1.1 Back

4   "Around 40,000 more deaths between December and March than expected from the death rates in other months of the year [Curwen 1990]" DOH review of evidence: Epidemiology, Public Health Impact (4.1) (see: Back

5   UKFPS, para 1.11 Back

6   Q 3 Back

7   UKFPS, para 8.21 Back

8   UKFPS, box 8.1 Back

9   App 6, EAS, Section 3 Back

10   Q 125 Back

11   Q 187 Back

12   Apps 1, 12, 15 Back

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