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3 Fuel Poverty

35. 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) ⁹ 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."

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

36. In the above definitions 'income' is net of income and council taxes (See paragraph 90 for additional notes on fuel poverty). For a more detailed description of the criteria involved in 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 ¹⁰ and the SHCS Fuel Poverty Report 2003/4 ¹¹. A technical note on the calculation of Fuel Poverty figures using SHCS data can be found on the SHCS website ¹².

37. Figure 7 and Table 18 show that from 1996 to 2002 the number of fuel poor households in Scotland fell substantially from around 36% to 13% ¹³. In 2003/4, 15.4% of households (350,000) were assessed as fuel poor, and, in 2004/5, 18.2% of households (419,000) were estimated to be in fuel poverty. In 2005/6, 23.5% households (543,000) were found to be fuel poor. This is a statistically significant increase over the 2004/5 figure.

Figure 7: Households in Fuel Poverty 1996-2005/6 (% and CIs)

Table 18: Fuel Poverty and Extreme Fuel Poverty 1996-2005/6 (000s and CIs)

38. In each of the five survey years there were a number of cases where it was not possible to determine fuel poverty status. These have been reapportioned pro-rata 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 ¹⁵. In 2005/6 44 'missing' cases were reapportioned.

39. Following a fall between 1996 and 2002, the number and proportion of households in fuel poverty has subsequently increased. Changes in fuel prices were an important factor in both the reduction in numbers in fuel poverty between 1996 and 2002 and in the subsequent increase. At the time of the 2002 survey it was estimated that of the 26% fall in fuel poverty between 1996 and 2002 ¹⁶, 9 percentage points was due to the fall in fuel prices over the period, 4 to improved energy efficiency and 13 to real increases in incomes.

40. Because of the small sample sizes in the 2004/5 and 2005/6 surveys, 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.

41. However, in general terms, re-running the fuel poverty calculations on the 2005/6 sample using 2004/5 fuel prices up-rated for general inflation showed that there would have been no statistically significant change in fuel poverty between 2004/5 and 2005/6 had fuel prices not increased in real terms over the period.

42. 7.5% of households (173,000) were also estimated to be in extreme fuel poverty, i.e. having to spend in excess of 20% of their income on fuel. Almost a third of those in fuel poverty are in extreme fuel poverty ( Table 19 - 20 and Figure 8).

43. Those with 'poor' NHER scores are more likely than those with higher NHER scores to be fuel poor. Older smaller and single pensioner households are more likely to experience fuel poverty than any other household type. Almost all of those with a household income of less than £100 per week are fuel poor. The rate of fuel poverty is higher in rural areas than in urban areas ( Table 19 - 20 and Figure 8).

Figure 8: Households in fuel poverty by tenure, NHER band, household type, household income and urban/rural (%)

Table 19: Fuel Poverty by dwelling and household characteristics (000s)

Table 20: Fuel poverty by dwellings and household characteristics (%)

Table 20: Fuel poverty by dwellings and household characteristics (%) continued

44. Those in the private sector are more than 4 times as likely as those in the social sector to experience extreme fuel poverty ( Table 20).

45. People living in tenements are least likely to and those living in detached houses most likely to experience fuel poverty. A third of households in detached houses are fuel poor compared with 14% of tenement dwelling households ( Table 20).

46. Households living in older dwellings are more likely to experience fuel poverty with around 3 in 10 households living in dwellings built before 1919 being fuel poor compared to 1 in 10 of those living in dwellings built after 1982. This is at least in part related to the greater energy efficiency of dwellings built after 1982 as discussed in paragraph 29.

47. Households with partial central heating or no central heating are around twice as likely to suffer fuel poverty as those with full central heating. Around 1 in 5 gas users are fuel poor compared to around a third of electricity users and around 40% of users of oil and 'other fuels'. Furthermore those who use oil or 'other fuel type' (not gas or electricity) are around three times more likely to experience extreme fuel poverty than gas users ( Table 20).

48. Households with lower energy efficiency are much more likely to be fuel poor. Households living in dwellings rated "moderate" or "poor" are respectively around 3 and 5 times more likely to experience fuel poverty than those with a "good" rating. Furthermore those with a "poor" NHER score are more than 10 times as likely to experience extreme fuel poverty as those with a "good" rating, with a quarter of such households in extreme fuel poverty ( Figure 8 and Table 20).

49. Just under half of single pensioner households (181,000) and around two fifths of older smaller households ²⁰ (143,000) were fuel poor, making them more likely than other household types to experience fuel poverty. 14% of single pensioner households and 18% of older smaller households experienced extreme fuel poverty. 24% of single adult households (81,000) were also in fuel poverty. Family and non-pensioner couple households were least likely to be fuel poor ( Figure 8 and Table 20).

50. Fuel poverty is, of course, highly correlated with income. The likelihood of experiencing fuel poverty increases as household income decreases. Almost all, 99%, of those in the lowest income band (less than £100 p.w.) are fuel poor. More than three quarters of households in this income band experience extreme fuel poverty compared with no households in the top two income bands and 16% of households in the second lowest income band ( Figure 8 and Table 20).

51. Rural households are more susceptible to fuel poverty than urban households. Just over a third of those in rural areas suffer fuel poverty compared with a fifth of urban households. 14% of rural households are in extreme fuel poverty, making extreme fuel poverty more than twice as likely for a rural household as for an urban household ( Figure 8 and Table 20).

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