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Energy Minister lauds new system of calculating fuel poverty

By Katie Anderson on August 19, 2013

The Department for Energy and Climate Change (DECC) has implemented a new measure of fuel poverty that reduces the number of households included under the definition by almost one million. But Energy Minister Michael Fallon believes the revised system will help officials identify and help the UK’s most vulnerable households. 

Is the new system likely to improve conditions for fuel-poor households, or does it represent a cynical attempt by government to downplay the effect of high energy bills on domestic customers?

Under the old system, which described a household as fuel poor when 10 per cent or more of its income was spent on energy, approximately 3.2 million homes in England would have been classed as fuel poor in 2011. The new measure reduces this number to below 2.4 million.

Instead of weighing the cost of energy against household income, the new system aims to identify low-income families that face high energy bills. In theory, the system is a simplified version of the original. In practice, it removes almost a million households from an equation that the government seems unable to solve.

Fallon argued: “This new, better-targeted definition will help get support to the most vulnerable in society. Two million households received cuts to their bills last winter under the Warm Homes Discount and the budget will continue to increase this year”.

10 per cent of household income was always an arbitrary measure of fuel poverty, but it was nonetheless important as it highlighted just how many households were struggling to afford the cost of running electrical appliances and gas central heating systems. By focusing on low-income households, the government is at risk of ignoring a substantial number of people who cannot be classed as financially poor but who are unable to pay their energy bills.

Although the number of fuel-poor households decreased under both measures in 2011, the gap between how much people are charged for energy and how much they can afford to spend on energy has widened over the past decade. In 2003 the gap was  £248. Today it is £438. In relative terms, there may be fewer households suffering from fuel poverty, but the situation for both ordinary and low-income households is hardly any better.