Topic guide to: Fuel Poverty

Northern Ireland Annual Business Inquiry

Department: Enterprise, Trade and Investment (Northern Ireland)
Provides information on the value of the economic activity that businesses generate and associated expenditure across the main industrial sectors in Northern Ireland.

Search for:

• Current and past editions
• Future Editions
• All Editions

Back to the top

A household is said to be in fuel poverty if it needs to spend more than 10 per cent of its income on fuel to maintain an adequate level of warmth (usually defined as 21 degrees Celsius for the main living area, and 18 degrees Celsius for other occupied rooms).

Fuel poverty ratio = fuel costs (usage x price) ÷ income

If this ratio is greater than 0.1 then the household is counted as being in fuel poverty.

In the calculation of this ratio, the fuel usage is modelled, to ensure the household achieves the satisfactory heating regime.

In addition to space heating, the fuel costs component also includes modelled spending on energy for water heating, lights and appliances and cooking.

Whether a household is in fuel poverty or not is determined by the interaction of a number of factors, but three specifically stand out. These are:

• the energy efficiency status of the property

• the cost of energy, and

• household income

Separate targets exist in England and each devolved administration, with the overall aim being that by 2018 no household in the UK should live in fuel poverty. In England, the target is, as far as reasonably practicable, that no vulnerable household will be in fuel poverty by 2010, and fuel poverty to be completely eradicated in all households by 2016.

Back to the top

Income

Income is measured net of income tax and National Insurance. It is calculated by adding the personal incomes of every member of the household together plus any benefit payments that the household receives (from private source, state benefits and savings) and income-related directly to housing. That is, Housing Benefit, Income Support for Mortgage Interest (ISMI), Mortgage Payment Protection Insurance (MPPI), and Council Tax Benefit (CTB).

Fuel Costs

Fuel costs are modelled, rather than based, on actual spending. They are calculated by combining the fuel requirements of the household with the corresponding fuel prices. The key goal in the modelling is to make sure that the household achieves the adequate level of warmth set out in the definition of fuel poverty.

Fuel prices per unit are calculated using data at a regional level and split by payment type. A household’s location, fuel mix (gas, standard electricity, economy7 electricity, heating oils) and fuel payment method (direct debit, standard credit and pre-payment) are matched against the fuel price data to give the cost per unit of fuel required.

The household fuel consumption requirements are modelled based on a number of factors:

• the size of the property

• the energy mix usage of each household. Typically around 55 per cent of energy is used for space heating, 30 per cent for lights and appliances, approximately 10 per cent for water heating, and the remainder for cooking 

• the heating regime applied. There are currently three regimes:

  • a ‘standard heating regime’ where the heating is assumed used only in the evening and weekend and is aimed at those who leave the house during the day (for work, study, and so on)

  • a ‘full heating regime’ where the household is heated continuously and is applied mainly to those who do not leave the house during the day (the disabled, sick, unemployed), and

  • a ‘partial heating regime’ applied for people living in houses larger than their needs which assumes only parts of the house are heated at any one time

• the energy efficiency of the household

Relative effects

This last variable, the energy efficiency of the household, is an important factor affecting the fuel requirement of a household. It is also one of the main variables relating to energy consumption that can be affected by intervention of energy efficiency measures including:

• EEC, the Energy Efficiency Commitment 

• CERT, the Carbon Emission Reductions Target which replaced EEC in April 2008

• Warm Front

Other factors relating to fuel requirement are harder to change, so fuel poverty can often be considered to be an interaction of three main factors only:

• the energy efficiency of the dwelling

• the cost of energy, and 

• household income

The UK Picture

Fuel Poverty is a partially devolved issue with each separate administration having their own targets. The main reason for the partial devolution is that the devolved administrations have the power to affect certain aspects of fuel poverty policies (such as energy efficiency programs) but not others (incomes and market conditions, which impact on fuel prices).

Scotland, Wales and Northern Ireland each publish reports on their national level of fuel poverty. Results for England are published as part of the UK Fuel Poverty Strategy that also collates information from across the UK.

Back to the top

Back to the top