Scottish Government

4 Fuel Poverty

74. The term 'Fuel Poverty' refers to the situation where a household cannot afford to heat their home to an adequate level. The Scottish Government uses the following definition of fuel poverty as set out in the Scottish Fuel Poverty Statement ( FPS) ¹³ 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."

The Scottish Government have pledged to ensure that by November 2016, so far as is reasonably practicable, people are not living in fuel poverty in Scotland.

75. Furthermore 'Extreme Fuel Poverty' is defined as a household having to spend more than 20% of its income on fuel.

76. The concept of fuel poverty is based on a theoretical calculation of how much it would cost to heat a dwelling according to a specified regime. For a more detailed description of 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 ¹⁴ and the SHCS Fuel Poverty Report 2003/4 ¹⁵ . A technical note on the calculation of Fuel Poverty figures using SHCS data can be found on the SHCS website ¹⁶ .

77. In each of the seven continuous survey years there were a number of cases where it was not possible to determine fuel poverty status. These have been apportioned on a pro-rata basis between the two categories (or three categories in the case of extreme fuel poverty) as was discussed in the 2004/5 SHCS Key Findings Report ¹⁷ . 88 'missing' cases were reapportioned in 2010. Households with negative annual household income after council tax deduction are removed from the fuel poverty calculations but reapportioned in this way.

78. Figure 10 and Table 24 show that from 1996 to 2002 the number of fuel poor households in Scotland fell from around 36% to 13% ¹⁸ . In 2003/4, 15% of households (350,000) were assessed as fuel poor, and, in 2004/5, 18% of households (419,000) were estimated to be in fuel poverty. This figure increased in 2005/6, 2007, 2008 and again in 2009 reaching 33% (766,000). In 2010 this figure dropped back to 28%, amounting to 658,000 fuel poor households.

79. Extreme fuel poverty in 2010 remains higher than 2002 levels, but dropped back down from the 2009 peak. In 2002, 3% of households (71,000) were living in extreme fuel poverty, rising to 10% of households (240,000) in 2009. This has since returned to close to the average for the preceding three years (see Figure 10) of 7.8% (185,000 households).

Figure 10 Households in Fuel Poverty 1996-2010 (% and CI)

Table 24 Fuel Poverty and Extreme Fuel Poverty 1996-2010 (000s, % and CIs)

80. The 3 main factors in fuel poverty are incomes, energy efficiency and fuel costs ¹⁹ . Change in any of these drivers will usually influence fuel poverty figures.

81. The survey found that average household incomes remained static between July 2009 and July 2010.

82. Because of the small sample sizes in surveys after 2004, the precision of any estimates of the effect of improved energy efficiency measures will be poor, as will estimates of the offset of those improvements against the impact of fuel price increases. However there was an improvement in energy efficiency measured by NHER over the year with the proportion of dwellings in the good NHER category rising from 55% to 62%.

83. Fuel price changes have been shown to be an important factor in both the reduction in numbers of households in fuel poverty between 1996 and 2002 and in the subsequent increase to 2009. They also play a role in the reduction to June 2010.

84. Table 25 and Figure 11 show the change in the 3 main fuel prices between May 1996 and March 2011 against changes in fuel poverty up to July 2010. The table includes an average fuel price figure weighted by the proportion of households using each of those fuels for their home heating. It shows that on average between 2002 and 2009 fuel prices and fuel poverty rose. In 2010 fuel prices for all fuels except heating oils, dipped slightly which is reflected in a fall in fuel poverty for 2010.

Table 25 Retail Price Index fuel components ²⁰ , May 1996 to March 2011

Figure 11 Fuel Poverty by Retail Price Index fuel components

85. From Table 26, we can see that people living in terraced houses or tenement flats are least likely to, and those living in detached houses most likely to, experience fuel poverty. 34% of households (173,000) in detached houses are fuel poor compared with 25% of terraced households (124,000) and 25% of tenement dwellings (134,000).

Table 26 Fuel Poverty by dwelling characteristics (000s)

86. Households living in older dwellings are also more likely to experience fuel poverty with around a third of households (162,000) living in dwellings built before 1919 being fuel poor compared to 17% (86,000) of those living in dwellings built after 1982 (Table 25 and Table 27). This is at least in part related to the greater energy efficiency of dwellings built after 1982 as discussed in paragraph 48.

87. Households in dwellings with lower energy efficiency are more likely to be fuel poor. 58% of people living in dwellings rated 'poor' are living in fuel poverty compared with 40% of those in dwellings rated 'moderate' and 20% of those rated 'good'. Furthermore, 31% of those households with a 'poor' NHER score are living in extreme fuel poverty whereas only 4% of those with a 'good' rating, are in extreme fuel poverty (Table 28 and Figure 12).

Figure 12 Households in fuel poverty by tenure, NHER band, household type, household income and urban/rural (%)

88. 33% of households without central heating and 36% of households with partial central heating are fuel poor compared to 28% of those with full central heating. Households without central heating are almost three times as likely to be in extreme fuel poverty than those with full central heating (Table 28).

89. Households that use electricity, oil or other fuel types (such as coal or peat) are more likely than those who use gas to experience fuel poverty. Oil or solid fuel users are more than twice as likely as gas users to be in extreme fuel poverty. (Table 26 and 28).

90. Furthermore, households living in dwellings not on the gas grid are twice as likely to be in extreme fuel poverty as those who are on the gas grid. Around 45% of those households in dwellings not on the gas grid are fuel poor (88,000) compared with 26% (570,000) of those who are (Table 26 and Table 28).

91. Rural households are more susceptible to fuel poverty than urban households. 38% of those in rural areas suffer fuel poverty compared with around 26% of urban households. Extreme fuel poverty is twice as prevalent in rural areas: 14% of rural households, compared to only 7% of urban households, are in extreme fuel poverty (Table 28 and Figure 12).

92. Moving on from dwelling characteristics to household characteristics, the elderly are most at risk from fuel poverty: 55% of single pensioner households (196,000) and 40% of older smaller households ²¹ (161,000) were fuel poor. 23% of single pensioner households and 18% of older smaller households experienced extreme fuel poverty. Of households with children, single parent families are most at risk: 31% live in fuel poverty (Table 28, Table 29 and Figure 12).

93. Local Authority tenants are the most likely to experience fuel poverty, followed by Housing Associations. Extreme fuel poverty, however, is most prevalent in the private sector, where it is nearly three times as likely as in a housing association (Table 29).

94. Fuel poverty is, of course, highly correlated with income. The likelihood of experiencing fuel poverty increases as household income decreases. Almost all of those in the lowest income band (less than £100 per week) are fuel poor (98%). 92% of households (68,000) in this income band experience extreme fuel poverty. (Table 27, Table 29 and Figure 12).

95. Council tax band is a poor predictor of fuel poverty (Table 27 and Table 29).

Table 27 Fuel Poverty by household characteristics (000s)

Table 28 Fuel poverty by dwellings characteristics (Row %)

Table 29 Fuel Poverty by household characteristics (Row %)