Annex B: Textual explanation of the new Fuel Poverty Definition
- The first element of the test retains a fuel cost to income ratio whereby, in order to qualify as fuel poor, a household requires to spend over 10% of its income on household fuel. As is the case with the current definition, the applicable fuel costs are those deemed necessary to heat the home as opposed to those fuel costs which the household actually incurs. However, unlike the current definition, the income used in this part of the test is the household's after housing costs ("AHC") net income. This means that rent or mortgage costs, council tax and charges for water and sewerage are deducted from the household's net income whereas under the current definition, household income is defined as income before housing costs with only council tax, water and sewerage charges deducted.
- The second element of the test introduces an income threshold whereby a household is in fuel poverty if, after the deduction of its necessary fuel costs and its childcare costs (if any) as well as benefits received for a care need or disability (if any) its remaining AHC net income is below 90% of the UK MIS or below the additional remote rural, remote small town and island uplift (where relevant) for its household type.