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How can we get the measure of rural fuel poverty?

This blog has been written by Jessia Sellick, of Rose Regeneration. 

What is fuel poverty?

In general, it relates to households that have to spend a high proportion of their household income to keep their home at a reasonable temperature.

This Review, commissioned in 2011, highlighted three key ways in which fuel poverty is a serious national problem:

  • From a poverty perspective: households with high energy costs living in poverty or on its margins face extra costs to keep warm above those for typical households with much higher incomes.
  • From a health perspective: living at low temperatures as a result of fuel poverty is a significant contributor to both excess winter deaths and a number of incidents of ill-health, placing additional demands on the health and social care systems.
  • From a carbon reduction perspective: the energy inefficiency of homes affects the ability to reduce carbon emissions, with fuel poverty providing a further barrier in terms of the implementation of policies to mitigate climate change since those on low incomes are often least able to afford any increases in prices that may result from them.

The report emphasised the overlap between low income and the energy inefficiency of the homes people live in. The authors recommended using a definition and measurement focused on ‘individuals in households living on a lower income in a home that cannot be kept warm at reasonable cost’.

Regardless of which definition is applied, the causes of fuel poverty are underpinned by three key factors: (i) a household’s income, (ii) fuel prices, and (iii) energy consumption – which can be affected by the energy-efficiency of the household’s dwelling.

In a rural context, fuel poverty is often driven by rising fuel prices, an ageing housing stock that is not thermally efficient, a lack of access to natural gas supplies, and/or the costs of delivering fuel to more sparsely populated areas.

The Statistical Digest of Rural England identified 12% of households in rural areas to be in fuel poverty. While historically fuel poverty was seen to be more prevalent in rural areas, since 2017 urban areas have had the greater proportion of fuel poor households (with 13.8% of urban households and 11.6% of rural households fuel poor in 2019). However, the fuel poverty gap is larger in rural areas compared to urban areas – with the average fuel poverty gap for fuel poor households in rural villages, hamlets and isolated dwellings £585 in 2019 compared to an average fuel poverty gap of £216 for all fuel poor households. Similarly, using the LIHC measure, the average fuel poverty gap for urban households decreased between 2011 and 2019 whereas in rural areas this gap widened over the same period.

What is the Government doing about it?

The Government published an updated fuel poverty strategy in 2021. This set out several policies to improve fuel poverty, including:

  • £60 million of additional investment to retrofit social housing and £150 million for the Home Upgrade Grant.
  • An expansion of the Energy Company Obligation (ECO) requiring larger domestic energy suppliers to install heating, insulation, or energy efficiency measures into the homes of people on low incomes, vulnerable or fuel poor.
  • An extension of the Warm Home Discount, a requirement for energy companies to provide a £140 rebate on the energy bill of low income older people and other low income households with high energy bills.
  • Drive over £10 billion of investment in energy efficiency through regulatory obligations in the Private Rented Sector.

As indicated in the 2011 Review, Government policy on fuel poverty impacts upon a number of policy areas. I offer three examples.

  • The first example is energy efficiency which is seen as one of the key ways of alleviating fuel poverty. The Fuel Poverty Energy Efficiency Rating (FPEER) is a measure of the energy efficiency of a property. According to the Statistical Digest for Rural England; rural village, hamlet and isolated dwelling households with the poorest FPEER rating of F or G had an average fuel poverty gap of £1,213 compared with an average fuel poverty gap of £856 for urban households with the same energy rating.
  • The second example is health and wellbeing – with cold homes having negative impacts on a person’s physical and mental health. The Cold Weather Plan for England published in October 2021, for example, describes how the health impacts of cold homes include increased risk of heart attack or stroke, respiratory illnesses, poor diet [heat or eat choices], and worsening or slow recovery from existing conditions. The Plan calls for a strategic approach to reduce excess winter deaths across local health and social care economies.
  • The third example is the economy where energy efficiency can lead to job creation and provide greater energy security. Back in 2019, the House of Commons BEIS Committee estimated that energy efficiency measures could sustain between 66,000 and 86,000 jobs across the UK; prevent expensive investments in infrastructure; and increase the UK’s prominence as an exporter of insulation and retrofit goods and services.

For the most part, these interventions and schemes take broad approaches: incorporating improved insulation, replacing old or inefficient heating systems, and/or reducing home energy bills for householders.

How do these measures to alleviate fuel poverty affect rural residents?

For example, how do these measures work for 4 million UK households who are ‘off grid’, meaning they do not receive mains gas and rely upon heating oil or liquid petroleum gas (LPG)? It is estimated that a typical household heated by oil will use 1,500-2,500 litres a year. According to BoilerJuice, the price per litre increased from £46.50 in September 2021 to £156.51 in March 2022. While gas and electricity prices are capped, heating oil prices are not. Moreover, data from Savills suggests that rural dwellings are often less energy efficient – with EPC ratings of E and D in hamlets compared to ratings of C and D in towns and cities.

A volatile energy market and poorly insulated housing stock means it is unlikely that fuel poverty will be eliminated in the near-future in rural areas. Therefore, do we need to prioritise support, perhaps focusing on those residents that are most vulnerable and/or facing the highest costs and/or geographic areas with household above average needs and costs? Or should we avoid a ‘worst first’ approach to ensure all fuel poor households are able to receive some form of support? 

What does the future hold?

Will more rural residents face choosing between heating or eating or indeed be left struggling to be able to do either? What more can be done be done to tackle fuel poverty and prevent rural residents from being left out of the cold? In the short term, how can we ensure ‘rural’ features more prominently in Government support and in its annual debate on fuel poverty? And, in the longer-term, how can we invest in the housing stock in rural areas, and look at rural resident’s incomes?  

What does the RSN want?

Government should focus its initial net zero programmes on off gas grid homes on making them ‘net zero ready’, by significantly improving their energy efficiency.  This should be a win-win, helping many households in fuel poverty and making the transition to low carbon home heating fuels much simpler in the long term.

The RSN is campaigning for a fair deal for rural communities.  The issues need to be tackled from various approaches including long reaching supporting for the rural economy to ensure that low wage levels can be improved along with supporting rural houses to become more energy efficient.  In addition, short term measures will be needed to make sure that rural families are not facing a “heat or eat” crisis in the coming months.

- To read the full article on fuel poverty, click here

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