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3 Fuel Poverty

29. The term 'fuel poverty' refers to the situation where a household cannot afford to heat their home to an adequate level. The Scottish Executive uses the following definition of fuel poverty as set out in the Scottish Fuel Poverty Statement ( FPS) ⁸ published in 2002:

"A household is in fuel poverty if it would be required to spend more than 10% of its income (including Housing Benefit or Income Support for Mortgage Interest) on all household fuel use."

Furthermore 'extreme fuel poverty' can be defined as a household having to spend more than 20% of its income on fuel.

30. In the above definitions 'income' is net of income and council taxes. See paragraph 61 for additional notes on fuel poverty. For a more detailed description of the criteria involved in the definition of fuel poverty and analysis of previous years' SHCS fuel poverty statistics see the Fuel Poverty Statement, the SHCS 2002 Fuel Poverty in Scotland Report ⁹ and the SHCS Fuel Poverty Report 2003/4 ¹⁰.

Figure 6: Fuel Poverty 1996-2004/5

Table 12: Fuel Poverty and Extreme Fuel Poverty 2002 to 2004/5

31. From 1996 to 2002 the number of fuel poor households in Scotland fell substantially from around 36% to 13% ¹¹. In 2003/4 15.4% of households (350,000) were assessed as fuel poor and in 2004/5 18.2% of households (419,000) were estimated to be in fuel poverty (Table 12).

32. The figures for 1996, 2002 and 2003/4 are revisions of previously published estimates. As mentioned in paragraph 5, these revisions have been made because of a change in the methodology for the treatment of missing values. Previously, analysis divided households into 3 discrete categories: "in fuel poverty", "not in fuel poverty", and "not known". This meant that the published figure was likely to be an under-estimate of the true figure for those in fuel poverty, as some of those for whom the figure could not be calculated were likely to be in fuel poverty. Analysis of the cases where a fuel poverty figure could not be calculated suggested no clear bias as to whether they were more or less likely than the rest of the population to be in fuel poverty. Hence these "not knowns" have been reapportioned pro rata between the other two categories ¹².

33. Figure 6 and Table 12 indicate that, following a sharp fall between 1996 and 2002, the number and proportion of households in fuel poverty has subsequently increased. Changes in fuel prices have been an important factor in both the reduction in numbers in fuel poverty between 1996 and 2002 and in the subsequent increase. [At the time of the 2002 survey it was estimated that of the 26% fall in fuel poverty between 1996 and 2002 ¹³, 9 percentage points was due to the fall in fuel prices over the period, 4 to improved energy efficiency and 13 to real increases in incomes.] Because of the small sample size in the 2004-05 survey it is not possible to give a precise assessment of the contribution of these factors to the change between 2002 and 2004-05 and, in particular, the extent to which improved energy efficiency has offset the impact of fuel price increases. Re-running the fuel poverty calculations on the 2004-05 sample using 2002 fuel prices uprated for general inflation only showed that there would have been no significant change in fuel poverty between 2002 and 2004-05 had fuel prices not increased in real terms over the period.

34. 5.2% of households (119,000) were also estimated to be in extreme fuel poverty - i.e. having to spend in excess of 20% of their income on fuel.

Figure 7: Percentage of households in fuel poverty by tenure, NHER band and type of household: 2004/5

35. Those renting their property from a local authority or other public sector organisation are less likely than any other tenure type to be fuel poor. Furthermore social renters (this includes both LA/other public sector renters and those who rent from a housing association/co-operative) are less likely to experience extreme fuel poverty than those within the private sector (Tables 13 & 14 & Figure 7).

Table 13: Fuel Poverty by tenure, age of dwelling, type of dwelling, fuel type and extent of central heating, NHER band, type of household and household income (000s)

Table 14: Fuel Poverty by tenure, age of dwelling, type of dwelling, fuel type and extent of central heating, NHER band, type of household and household income (%)

36. Households living in older dwellings are more likely to experience fuel poverty with just over a quarter of households living in dwellings built before 1919 being fuel poor compared to 13% of those living in dwellings built after 1982. This is at least in part related to the greater energy efficiency of dwellings built after 1982 as discussed in paragraph 24.

37. People living in detached or semi-detached houses are more likely to be in fuel poverty than those living in terraced houses or flats. Around a quarter of households living in detached houses are in fuel poverty, and almost half of those are in extreme fuel poverty.

38. Households with full gas central heating are less likely to be fuel poor (around 15% being fuel poor) than households with other types of heating. 10-15% of those with no central heating, partial central heating or central heating running on fuels other than gas or electricity are in extreme fuel poverty (Table 14).

39. Households with lower energy efficiency are much more likely to be fuel poor. Households living in dwellings rated "moderate" or "poor" are respectively around 3 and 5 times more likely to experience fuel poverty than those with a "good" rating. Furthermore those with a "poor" NHER score are ten times more likely to experience extreme fuel poverty than those with a "good" rating, with around a fifth of such households in extreme fuel poverty (Figure 7 & Table 14).

40. Around a third of single pensioner households (121,000) were fuel poor, making them more likely than other household types to experience fuel poverty. 27% of older smaller households (generally pensioner couples) (103,000) and 23% of single adult households (79,000) were also in fuel poverty. Around 1 in 10 single-pensioner households experienced extreme fuel poverty. Family households were least likely to be fuel poor (Figure 7 & Tables 13 & 14).

41. Fuel poverty is, of course, highly correlated with income. The likelihood of experiencing fuel poverty increases dramatically as household income decreases. Over 90% of those in the lowest income band (less than £100 p.w.) were fuel poor and 57% experienced extreme fuel poverty.

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