The Scottish Fuel Poverty Statement
3 Defining Fuel Poverty
3.1 Section 95 of the Housing (Scotland) Act 2001 defines "fuel poverty" as being a household living in a home which cannot be kept warm "at reasonable cost." This is helpful as a general definition, but we need something more precise for the purpose of tracking progress in tackling fuel poverty.
Definitions of Fuel Poverty used in the UK Fuel Poverty Statement
The UK Fuel Poverty Strategy published in November 2001 recommends that the numbers of households suffering fuel poverty in England should be displayed using two main definitions. These are as follows:
- A household is in fuel poverty if, in order to maintain a satisfactory heating regime, it would be required to spend more than 10% of its income ( including Housing Benefit or ISMI) on all household fuel use;
- A household is in fuel poverty if, in order to maintain a satisfactory heating regime, it would be required to spend more than 10% of its income ( excluding Housing Benefit and ISMI) on all household fuel use.
In both of these definitions, a 'satisfactory heating regime' is defined as one that achieves 21° C in the living room, and 18° C in the other occupied rooms.
Although figures for England will be displayed using both of these definitions, targets have been set using the first definition.
3.2 The analysis of the 1996 Scottish House Condition Survey also used two definitions:
- A household is in fuel poverty if it needs to spend 10% or more of income on all fuel use in order to heat the dwelling to an acceptable standard. In this case, 'income' means the income of the head of household and partner net of tax plus any benefit payments and income from other sources, such as non-state pensions, alimony and maintenance payments;
- A household is in fuel poverty if it needs to spend 10% or more of income on heating only in order to heat the dwelling to an acceptable standard. In this case, 'income' means the income of the head of household and partner net of tax plus any benefit payments and income from other sources, such as non-state pensions, alimony and maintenance payments.
3.3 The Scottish Fuel Poverty Advisory Group discussed what definition should be used. On the basis of these discussions, we believe that there are clear advantages in maintaining consistency with the approach taken in the UK Fuel Poverty Strategy. We agree that no worthwhile distinction can be made between fuel used for heating and hot water and that used for other, equally essential purposes.
3.4 We have therefore adopted the following definition of fuel poverty in Scotland:
A household is in fuel poverty if, in order to maintain a satisfactory heating regime, 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.
3.5 We acknowledge the arguments that were made by some members of the Advisory Group and in the consultation that the definition should exclude Housing Benefit and Income Support for Mortgage Interest. The impact of this would be to exclude part or all housing costs for some (but not all) low income households. We were not persuaded by the arguments for this being the definition of fuel poverty, but agree that data should also be collected using this definition. Our presumption is that decreases or increases in the number of households that are in fuel poverty will be similar against each definition, that is, they will move in parallel.
3.6 Within the definition that we plan to use to set out targets and milestones, the following points would apply:
- The definition of a 'satisfactory heating regime' would use the levels recommended by the World Health Organisation. For elderly and infirm households, this is 23° C in the living room and 18° C in other rooms, to be achieved for 16 hours in every 24. For other households, this is 21° C in the living room and 18° C in other rooms for a period of 9 hours in every 24 (or 16 in 24 over the weekend); with two hours being in the morning and seven hours in the evening.
- 'Household income' would be defined as income before housing costs, to mirror the definition used in the UK Households Below Average Income (HBAI) Statistics (set out in Annex B).
The impact of income, price and energy efficiency on fuel poverty
The examples below provide some illustrations of the possible impact of changes in a single variable - income, price or energy efficiency - on a household's experience of fuel poverty based on the definition above.
Person A - in fuel poverty
Person A has a net income of 100 per week and is paying 12.50 a week in fuel bills. He lives in a two bedroom home in Fife with an NHER rating of 3. In order to take Person A out of fuel poverty, one of the following would need to happen:
- An increase in income of at least 25% to take his weekly income to more than 125 a week;
- an improvement in the energy efficiency rating of his home of at least 1.6 points to take the NHER rating to 4.6 or more; or
- a reduction in fuel prices of at least 20% to take his weekly fuel bill to below 10 a week.
Person B - not in fuel poverty
Person B has a net income of 160 a week, and is paying 15 a week in fuel bills. She lives in a three bedroom home in Paisley with an NHER rating of 7. The following changes would make Person B fall into fuel poverty:
- A fall in income of more than 6.25% to take her weekly income to below 150 a week;
- a reduction in the energy efficiency rating of her home of at least 0.5 points to take the NHER rating to 6.5 or less 3; or
- an increase in fuel prices of at least 6.6% to take her weekly fuel bills to more than 16 a week.