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Rethinking fuel poverty in the UK February 2012 Donald Hirsch.

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1 Rethinking fuel poverty in the UK February 2012 Donald Hirsch

2 Fuel poverty: three perspectives The poverty perspective Problem: high fuel costs stress family budgets Focus: low income households

3 Fuel poverty: three perspectives The health perspective Problem: unaffordable fuel costs create cold homes Focus: groups not heating houses properly

4 Fuel poverty: three perspectives The environmental perspective Problem: poor housing stock uses fuel wastefully Focus: thermally inefficient homes

5 Fuel poverty: three perspectives The poverty perspective The health perspective The environmental perspective CORE DRIVERS HOUSEHOLD INCOME FUEL EFFICIENCY OF HOMES

6 An underlying concept Fuel poverty means living in “a household living on a lower income in a home which cannot be kept warm at reasonable cost” Warm Homes and Energy Conservation Act 2000

7 Key measurement issues What is the threshold of low income? What do we mean by reasonable cost? How to combine these?

8 Current definition Fuel poverty = having to spend at least 10% of income on fuel to keep home warm

9 Current definition Problem 1: It doesn’t measure affordability Fuel poverty line (10% of income) Available for non-fuel spending Needed for fuel Income Spending Total income/spending

10 Current definition Problem 2: Why 10%? Should the threshold change with changing norms?

11 Current definition Problem 3: What is adequate warmth? DEGREES CENTIGRADE Living room standard Non-living room standard “no demonstrable risk” - WHO Average centrally heated homes Risk of respiratory problems (where humidity not optimal)

12 Redefining fuel poverty – low income, unreasonable fuel costs Income Fuel costs* 60% median income *”Fuel costs”= required fuel spending High fuel costs Low Income

13 Redefining fuel poverty – low income, unreasonable fuel costs Low income High fuel costs 60% median income after fuel costs

14 Redefining fuel poverty – low income, unreasonable fuel costs Low income High fuel costs 60% median income after fuel costs Median fuel costs Fuel poverty

15 Issues arising 1.Do rising fuel prices cause “fuel poverty” to rise proportionately? 2.What level of fuel efficiency is taken as “reasonable”? 3.What are the actual consequences of fuel poverty, for material hardship and for health?

16 Consequences 1: fuel pre-empts family budget Risk of spending high proportion of income* on fuel *At least 10% of disposable income (after housing costs) Income poor Not income poor Fuel poor Not fuel poor (old definition) 60% 5%5% 34 % 85%

17 Risk of spending high proportion of income* on fuel *At least 10% of disposable income (after housing costs) Hardest hit: Lone parents Low average family income High priority on meeting family needs Consequences 1: fuel pre-empts family budget

18 Risk of low fuel spending* as a % of requirement *Below 40% of requirement to meet temperature norm Income poor Not income poor Fuel poor Not fuel poor (old definition) 12 % 19 % 46 % 43% Consequences 2: fuel spending low relative to need

19 Risk of low fuel spending* as a % of requirement *Below 40% of requirement to meet temperature norm Consequences 2: fuel spending low relative to need Hardest hit: Single people (pensioners and non-pensioners) More likely to have high relative fuel costs More likely to spend less than “need”

20 Spending too little to heat an expensive home is not always linked to poverty (eg single pensioners) Many families in poverty spend a high proportion of income on heating, regardless of fuel efficiency Rising energy prices spread the problem Targeting the housing stock will not always reach people in greatest need Measures that target by income and housing efficiency may be best. Conclusion: five key observations

21 Centre for Research in Social Policy Schofield Building Loughborough University Loughborough Leicestershire LE11 3TU Telephone: +44 (0)


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