The Department of Energy and Climate Change (DECC) has set a new definition for fuel poverty following an independent review and consultation.
The new definition for a ‘fuel poor’ household will be:
- Total income is below the poverty line(i.e. has an income below 60% of the median once energy costs have been taken account of); and
- Energy costs are higher than typical.
The new indicator of fuel poverty will also include a fuel poverty gap, which is the difference between a fuel poor household’s energy costs and what they would need to be in order for that household to no longer be fuel poor.
The definition set out above will replace the old one which stipulated that households were in fuel poverty if they spent 10% of their annual income on energy. It was argued that the old definition distorted ministers’ understanding of fuel poverty and often falsely included non-fuel poor households.
As a result of the new definition, the Energy Bill will be amended to include new targets on fuel poverty reflecting the revised definition. According to a departmental press release, the amendments “will focus on ensuring that fuel poor households attain a certain standard of energy efficiency in their home by defining an average or a minimum standard for energy efficiency for fuel poor households.”
Edward Davey, secretary of state for energy and climate change, said: “I am determined to tackle the scourge of fuel poverty and help hard-pressed consumers across the country. In the past, action to tackle fuel poverty has been held back by how the problem has been defined. This made it difficult to deliver help to the people who need it most.
“The new definition, together with the amendment that we are making to the Energy Bill, will ensure a focus on the households that are at the heart of the fuel poverty problem. That’s those with both low incomes and high energy costs. Our new strategic framework sets out how we can use this new definition to target our resources in the most effective way.”
Greg Barker, minister for energy and climate change, added: “Despite the recent modest fall in the numbers of households in fuel poverty, there is still an unacceptably high number of people living in cold, damp, unhealthy conditions. That’s why we must take a new approach to fuel poverty, with energy efficiency at the heart.
“I am determined that we use new schemes like the Energy Company Obligation to target those who need support the most, and that’s what our new approach to fuel poverty will help to achieve.”