Fuel poverty: estimates for the UK
This research has been updated. The latest version is available here.
SUMMARY
- By January 2023 over half of households in the UK (15 million) will be in fuel poverty – spending over 10 per cent of net income on fuel.
- They will on average be spending £38.25 above the 10 per cent threshold.
- There are big regional variations in fuel poverty ranging from 47.5 per cent in London to 71.7 per cent in Northern Ireland.
ANALYSIS
In 2019/20, according to the Living Costs and Food Survey, the mean weekly household domestic energy expenditure was £24.75 (£1,287 per year), or if based on the median £21.39 (£1,112 per year). Then 19.2 per cent of households were spending more than 10 per cent of their net income on fuel (the conventional fuel poverty threshold).1 This is the latest survey-based estimate that we have, but in 2020 and 2021 there was very little change in the domestic fuel element of the Consumer Price Index.
In April 2022 the electricity and gas price cap set by Ofgem was increased by 54 per cent, which was expected to increase weekly household energy bills to £38.12 (£1,982 per year) or median £32.94 (£1,713 per year). All other things being equal this would have increased fuel poverty rates to 38.5 per cent.
Of course all other things have not been equal. In April 2022 benefits and pensions were increased by only 3.1 per cent, much less than the then current rate of inflation. Income tax and national insurance contributions (NICs) were increased at the same time as real earnings were falling. In his April budget the then chancellor announced a £150 rebate for households in Council Tax bands A-D.
Then in May 2022 he announced a further set of mitigations, including a £400 rebate for all households from the autumn and extra help for people receiving means-tested benefits, pensioners and people receiving disability payments. The Resolution Foundation estimated that the measures announced to support households this year will "in effect offset 82 per cent of the rise in households’ energy costs in 2022-23, rising to over 90 per cent for poorer households".
However the measures are one-offs, and now we know that the electricity and gas price cap is going to rise again in October 2022 and again in January 2023. The size of the increase has not yet been announced but it is expected2 to be a hike of 78 per cent, taking average electricity and gas bills to £67.85 per week (£3,528 per year). It is also expected that the electricity and gas price cap will be raised again in January by 4 per cent to £70.57 per week (£3,670 per year). Some3 predict much larger increases. The £400 rebate will mitigate these amounts over the period October 2022 to April 2023 by only £15.38 per week.
Our best estimate is that without further measures, and taking account the £400 rebate, fuel poverty rates will reach 53.4 per cent from October and 55.8 per cent from January. As well as the rate of fuel poverty rising, the depth (the gap between the amount of net income spent on fuel and the 10 per cent threshold) will also increase. These results are summarised in Table 1.
Table 1: Percentages and numbers of households in the UK living in fuel poverty
|
|
Average weekly fuel expenditure | % of UK households in fuel poverty | Average weekly fuel poverty gap | Number of households living in fuel poverty in UK | Number of people in fuel poverty |
|---|---|---|---|---|---|
|
Actual 2019/20 |
Mean £24.75 |
19.2% |
Mean £15.15 |
5,245,000 |
13,763,000 |
| May 2022 |
Mean £38.12 |
38.5% |
Mean £21.92 |
10,528,000 | 27,170,000 |
| October 2022 |
Mean £52.47 |
53.4% |
Mean £36.42 |
14,599,000 | 37,937,000 |
| January 2023 | Mean £55.19 Median £45.60 | 55.8% |
Mean £38.25 |
15,250,000 | 39,494,000 |
Source: LCFS 2019-20 weighted data.
Also inevitably the poorest (and coldest) regions of the country will experience the biggest increases in fuel poverty. Fuel poverty will reach 72 per cent in Northern Ireland and 62 per cent in Scotland, compared with 48 per cent in London.
Table 2: Estimated percentages and numbers of households living in fuel poverty by region, January 2023
|
Region |
% of households in fuel poverty | Number of households living in fuel poverty | Number of people in fuel poverty |
|---|---|---|---|
|
North East |
58.6% |
695,000 |
1,628,000 |
| North West & Merseyside | 59.4% | 1,889,000 | 4,590,000 |
| Yorkshire & the Humber | 58.5% | 1,377,000 | 3,398,000 |
| East Midlands | 57.1% | 1,140,000 | 2,927,000 |
| West Midlands | 57.9% | 1,387,000 | 3,587,000 |
| Eastern | 51.3% | 1,300,000 | 3,449,000 |
| London | 47.5% | 1,512,000 | 4,593,000 |
| South East | 49.2% | 1,792,000 | 4,957,000 |
| South West | 55.5% | 1,308,000 | 3,230,000 |
| Wales | 60.8% | 830,000 | 2,046,000 |
| Scotland | 61.5% | 1,469,000 | 3,655,000 |
| Northern Ireland | 71.7% | 551,000 | 1,419,000 |
Source: LCFS 2019-20 weighted data.
Table 3 shows the overlap between income poverty (equivalent to income less than 60 per cent of median before housing costs) and fuel poverty. In 2019-20 only 9.5 per cent of non-income poor were fuel poor, while 60.2 per cent of income poor were also fuel poor. By January 2023, almost half of all non-income poor would be fuel poor while over 80 per cent of income poor would also be fuel poor.
Table 3: Overlaps between fuel poverty and income poverty
|
Fuel poor not income poor % |
Fuel poor and income poor % |
Fuel poor % | |
|---|---|---|---|
| 2019/20 | 9.5% | 60.2% | 19.2% |
| Jan 2023 | 49.6% | 81.8% | 55.8% |
Table 4 shows which household types will be more or less likely to be fuel poor in January 2023. The households most likely to be fuel poor will be large families with children, lone-parent families and pensioner couples.
Table 4: Estimated fuel poverty rates by household type, January 2023
|
Household type |
% in fuel poverty |
|---|---|
| Single | 45.0% |
| Couple | 48.3% |
| Couple + 1 child | 54.2% |
| Couple + 2 children | 66.1% |
| Couple + 3 children | 80.8% |
| Couple + 4 or more children | 89.1% |
| Lone parent + 1 child | 65.8% |
| Lone parent + 2 or more children | 88.0% |
| Single pensioner | 63.8% |
| Couple pensioner | 82.6% |
| Multi-unit | 69.7% |
[1] There are other more sophisticated measures incorporating the thermal efficiency of dwellings. But they are difficult to operationalise with existing data sources. See J Hills, Getting the measure of fuel poverty: Final Report of the Fuel poverty review, 2012. http://eprints.lse.ac.uk/51237/1/__libfile_REPOSITORY_Content_CASE_CASEreports_CASEreport72.pdf, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/819606/fuel-poverty-strategy-england-consultation.pdf.
There is also a debate about whether the 10 per cent measure should be adjusted to equivalent income (and/or expenditure). See https://pure.york.ac.uk/portal/en/publications/access-to-essential-services-for-lowincome-people(1016428e-1bdd-448a-b030-b4b6d1629ff6).html. It is not equivalised in this analysis. But it makes a big difference to which households are defined as in fuel poverty.
[2] By Cornwall Insight.
[3] BFY predict £3,850 by January 2023.