Scottish house condition survey: 2017 key findings

4 Fuel Poverty

• In 2017, 24.9% of households (613,000) were estimated to be in fuel poverty, a similar level to 2016 (26.5% or 649,000 households). 7.0% or 174,000 households were living in extreme fuel poverty in 2017. This follows a period of annual decreases between 2014 and 2016 and is the lowest rate recorded by the survey since 2005/06.
• Between 2016 and 2017 rates of fuel poverty decreased in urban areas (from 24% to 21%), widening the gap when compared to rural areas (43%). This is likely to be driven by gas prices continuing to fall in 2017, while oil prices increased by 24% between 2016 and 2017.
• On average the social (24%) and private sector (27%) have similar rates of fuel poverty in 2017. Households in local authority housing saw an improvement in fuel poverty rates with 28% estimated to be in fuel poverty compared to 36% in 2016.

Figure 18: Fuel Poverty and Extreme Fuel Poverty since 2003/4

Note: Energy requirement underpinning fuel poverty estimate modelled on the following basis: 2003/4 – 2009: BREDEM – 12; 2010 – 2013: BREDEM 2012 v.1.0; from 2014 onwards: BREDEM 2012 v.1.1. + WHD indicates the inclusion of Warm Homes Discount, and + New Prices to the adjustment of fuel price sources; from 2016 a further improvement is included by assigning pre-payment metered fuel prices to the relevant households.

4.1 Definition and Measurement of Fuel Poverty

137. As set out in the Scottish Fuel Poverty Statement, 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 on all household fuel use^[36].

138. Under the 2001 Housing (Scotland) Act (section 88), the Scottish Government was committed to eradicating fuel poverty as far as practicably possible by November 2016^[37]. In June 2016, the Minister for Local Government and Housing informed Parliament that, based on the advice received from experts, it was unlikely that the statutory fuel poverty target would be met. This has now been confirmed by 2016 and 2017 fuel poverty rates of 26.5% and 24.9% respectively.

139. The Fuel Poverty (Target, Definition and Strategy)(Scotland) Bill^[38] was introduced to the Scottish Parliament on 26 June 2018. This includes a proposed new definition of fuel poverty based on advice from an independent panel of experts. The statistics presented in this report are based on the current definition and this will continue until the legislation receives Royal Assent and the new definition become the official measure.

140. Extreme fuel poverty indicates that a household would have to spend more than 20% of its income to maintain a satisfactory heating regime.

141. A satisfactory heating regime is defined as follows:

• For “vulnerable” households^[39], 23°C in the living room (zone 1) and 18°C in other rooms (zone 2), for 16 hours in every 24.
• For other households, 21°C in the living room (zone 1) and 18°C in other rooms (zone 2) for 9 hours a day during the week and 16 hours a day during the weekend.

142. Although space heating is the largest component of the energy spend which underpins the fuel poverty estimate, there are other types of energy use that are also taken into account, such as water heating, lighting and appliance use, and cooking. All types of energy expenditure are estimated on the basis of a standard set of behavioural assumptions and do not reflect the actual energy use of the household, which may vary considerably depending on personal preference and priorities relative to other types of household expenditure.

143. Figure 19 shows that in 2017, on average, around 74% of the modelled household energy demand was from space heating, 13% from water heating, 11% from lighting and appliance usage, and 3% was accounted for by cooking. These proportions are the same as in 2016.

Figure 19: Mean Household Energy Consumption by End Use, 2017

Note: Figures do not add to 100% due to rounding

144. The energy costs of maintaining a satisfactory heating regime and other uses of energy are modelled using data from the physical inspection of dwellings and the household interview conducted as part of the SHCS, as well as information on consumer fuel prices. The methodology for modelling the cost of energy use was updated for the 2014 Key Findings report and details were provided in the accompanying Methodology Notes^[40].

145. The current report continues to use this improved method for setting the cost of the domestic energy requirement. A further small improvement introduced in the 2016 survey about pre-payment meters for energy supply is also continued, which has allowed us to improve the accuracy of fuel price information for pre-payment users, who are more common among lower income groups which are at higher risk of fuel poverty. In 2017, 21% of households in Scotland had a pre-payment meter (mains gas, electricity, or both).

146. The cost of the energy requirement includes an allowance for the bill rebate provided under the Warm Home Discount (WHD) scheme^[41]. It no longer includes the £12 contribution of the Government Electricity Rebate (GER) as the scheme only ran for the previous two years (2014 and 2015)^[42].

4.2 Fuel Poverty and Extreme Fuel Poverty

147. In 2017 an estimated 24.9% of all households were in fuel poverty, around 613,000 households. This is not statistically different to the 2016 fuel poverty rate of 26.5% (around 649,000 households).

148. The fuel poverty rate is at the lowest rate recorded by the survey since 2005/6.

149. Around 7.0% (174,000 households) were living in extreme fuel poverty in 2017 which is similar to the 7.5% (183,000 households) in the previous year.

Table 29: Estimates of Fuel Poverty and Extreme Fuel Poverty since 2011

	Fuel Poverty		Extreme Fuel Poverty
	000s	%	000s	%
2011	779	32.9%	209	8.8%
Oct 2011	911	38.5%	257	10.9%
2012	824	34.5%	222	9.3%
2013	860	35.8%	236	9.8%
2014	845	34.9%	229	9.5%
2015	748	30.7%	203	8.3%
2016	649	26.5%	183	7.5%
2017	613	24.9%	174	7.0%

Note: There are some discontinuities in the underlying methods as follows: figures for 2011 and 2012 allow for WHD adjustment only; 2013 include WHD and price source adjustment; figures from 2014 onwards include WHD and price source adjustment and an updated BREDEM model; from 2016 a further improvement is included by assigning pre-payment metered fuel prices to the relevant households.

4.3 Drivers and Trends

150. Fuel poverty is affected by levels of household income, the price of fuel required for space and water heating, and the energy efficiency of housing. Fuel poverty under the current definition is distinct from poverty in that, while low income is an important driver, it is not a prerequisite. As shown in Table 35, fuel poor households are found in all income bands. Around 15% of all fuel poor households had weekly income above £400 before housing costs, which places nearly all of these households in the top half of the income distribution (Table 35).

151. In Table 30 and Figure 20 we have constructed indexes to compare trends in the three key drivers of fuel poverty since 2003. Measures of energy efficiency and household incomes are derived from SHCS data. The fuel price index is constructed from Department for Business, Energy and Industrial Strategy (BEIS) quarterly prices as described in section 4.3.1. Prices and incomes are presented in nominal (cash) terms.

152. Since 2003 the proportion of dwellings rated A-D has grown by 41%, while income has grown by 50%. Fuel prices have risen much faster, so that by 2017 they were around two and half times (158%) their level in 2003.

Figure 20: Trends in Fuel Price, Energy Efficiency and Median Income, 2003/4 to 2017

Note: All values indexed to 100 in 2003/4. Data for this chart are provided in Table 33. Fuel Price index constructed as described in section 4.3.1.

Fuel poverty energy requirement modelled on the following basis: 2003/4 – 2009: BREDEM – 12; 2010 – 2013: BREDEM 2012 v.1.0; 2014 and 2015 onwards: BREDEM 2012 v.1.1.

Fuel poverty costs as follows: 2011 and 2012 include WHD adjustment only; from 2013 onwards include WHD and price source adjustments; from 2016 a further improvement is included by assigning pre-payment metered fuel prices to the relevant households.

153. Until 2012 fuel price growth outweighed gains from improving energy efficiency and household income growth, such that the increase in fuel poverty broadly mirrored the growth in the fuel price index^[43]. Between 2013 and 2014 the rate of fuel poverty did not increase in line with the rise in the average fuel price index, and there are a number of factors that may have contributed^[44]. In 2015 and 2016, the decline in the price of fuel and improvements in energy efficiency was reflected in a reduction in the fuel poverty rate.

154. The 2017 rate (24.9%) is likely to be due to fuel price increases being offset by increases in median income and energy efficiency.

Table 30: Fuel Price, Energy Efficiency and Income Indices

Key Drivers of Fuel Poverty: Indices 2003/4=100
Survey year	Fuel poverty		Fuel Price Index		EE: A-D rated		Median income
	%	Ix	Ix	Rebased	%	Ix	£	Ix
2003/4	16.0	100	47	100	62%	100	16,000	100
2004/5	18.9	118	52	110	65%	104	16,000	101
2005/6	24.7	154	60	126	69%	111	17,000	105
2007	26.5	166	79	167	69%	111	18,000	113
2008	27.2	170	95	201	71%	114	18,000	113
2009	34.4	215	103	218	72%	117	18,000	115
2010	34.7	217	100	211	73%	118	18,000	114
2011	32.9	206	111	235	77%	124	20,000	123
Oct 2011	38.5	240	122	258	77%	124	20,000	123
2012	34.5	216	122	257	80%	128	20,000	128
2013	35.8	224	130	275	81%	131	20,000	128
2014	34.9	218	135	286	83%	134	22,000	136
2015	30.7	192	128	270	85%	137	22,000	136
2016	26.5	165	121	255	86%	139	22,000	138
2017	24.9	156	122	258	87%	141	24,000	150

Sources: BEIS Quarterly Prices; SHCS.

Note: Fuel poverty rates shown on BREDEM-12 basis (old energy model) up to 2009 and on BREDEM 2012 basis (new energy model) from 2010.

EE ratings shown on SAP 2005 basis up to 2009 and on SAP 2009 basis from 2010.

4.3.1 Fuel Costs

155. Data published by the Department for Business, Energy and Industrial Strategy (BEIS) on the price of key fuels enables us to construct time series for the price of fuels for the average Scottish household over the longer term.

156. Using information from the SHCS about the fuels used for space and water heating we can weight the national quarterly fuel price indices published by BEIS^[45] and produce an average index value for the price of the heating fuel requirement for Scotland. The results are shown in Figure 21.

157. Since the majority of Scottish households heat their properties with gas (79%), the national average index follows the gas index closely. Between 2003 and 2014 the price of the fuel mix required by the average Scottish household almost trebled. In 2015 and 2016 the average index fell by 5.6% and 5.4%, respectively, primarily due to the falling price of oil and gas. However, in 2017 the average index grew by 1.2%, mostly driven by electricity (up 6.7%) and liquid fuels (up 24%).

Figure 21: BEIS Fuel Price Indices and a Weighted Average for Scotland: 2003 to September 2018

Table 31: BEIS Current Fuel Price Indices and a Weighted Average for Scotland: 2003/04 – September 2018

	Current fuel price indices
Year	Gas	Electricity	Liquid fuels	Solid fuels	Other fuels	Weighted Average
2003/04	45.7	55.5	38.7	53.7	50.6	47.3
2004/05	50.1	60.0	51.0	57.7	55.4	52.0
2005/06	57.4	66.3	69.5	63.0	62.7	59.7
2007	78.1	84.9	73.2	71.4	81.2	78.8
2008	93.4	98.1	109.3	84.9	96.2	95.0
2009	105.9	102.6	77.0	100.0	102.9	103.2
2010	100.0	100.0	100.0	100.0	100.0	100.0
2011	110.9	107.3	126.6	104.8	110.0	111.3
Oct 2011	123.2	114.9	128.5	109.7	119.6	122.2
2012	122.5	113.4	130.5	108.6	118.7	121.5
2013	131.9	121.7	130.8	110.2	127.2	130.2
2014	138.2	128.5	116.0	113.2	132.8	135.2
2015	131.9	128.0	81.8	113.5	128.4	127.6
2016	124.1	127.7	72.9	113.3	124.6	120.7
2017	122.8	136.3	90.4	115.9	129.3	122.1
to Sep 2018	125.7	145.8	111.4	117.1	136.0	127.1

BEIS Quarterly Energy Prices, Table 2.1.3. Indices supplied with 2010 = 100 https://www.gov.uk/government/statistical-data-sets/monthly-domestic-energy-price-stastics

Weighted average based on SHCS heating fuel use proportions, 2003/4 to 2016. 2018 proportions assumed unchanged from 2017.

158. BEIS has published fuel price data up to September 2018. As fuel use changes slowly, we assume that the fuel mix in Scotland in 2018 was the same as captured by the 2017 SHCS in order to extend the weighted average for Scotland into 2018. Into the third quarter of 2018 the weighted average of heating fuels continues to rise, again driven by increases in prices for electricity (up 6.9%) and liquid fuels (up 23.2%). This amounts to an approximately 4.1% increase in the composite price on average 2017 levels to September 2018 (Table 31).

4.3.2 Household Income

159. The SHCS is not designed to capture income comprehensively. Total household income is not recorded, only that of the highest income householder and their partner. Income is reported in nominal terms and is not equivalised to take into account that households of different size and composition need different levels of income to sustain the same living standard. Figures in this section therefore may not align with official statistics on household income and inequality.

160. In 2017, 50% of households earned £23,800 or more after tax, up from £22,000 in 2016. This median income has increased by 32% (around £5,700) in cash terms since 2010.

161. Between 2016 and 2017 there was a 6% nominal increase in mean income of the surveyed households (Table 32). This was not uniform across the distribution, although increases across all deciles were detected. The increases ranged between 3% in the second from the top decile and 9% in the middle decile. Median income increased by 8%.

Table 32: Mean Annual Income in Each Decile Group, SHCS 2016 and 2017

Income Decile	Year		Percentage change
	2016	2017
1	£6,800	£7,200	5%
2	£11,100	£11,900	7%
3	£13,800	£14,900	8%
4	£16,800	£18,200	8%
5	£19,900	£21,800	9%
6	£24,300	£25,700	6%
7	£29,200	£30,700	5%
8	£35,600	£37,300	5%
9	£44,700	£46,100	3%
10	£68,200	£73,400	8%
All	£27,000	£28,700	6%
Median	£22,000	£23,800	8%

162. The increase in income can potentially be attributed to a number of factors, including to some extent sampling variation. While median income from benefits has decreased, overall earnings recorded by the survey have increased, particularly among households with children. Furthermore, overall median income from sources other than earnings or benefits increased in 2017 for older households, particularly from non-state occupational pensions.

4.3.3 Housing Stock

163. As we have seen from the analysis in Chapter 3, on some measures, the energy efficiency of the housing stock increased between 2016 and 2017, although this varied according to dwelling characteristics. There were improvements in the energy efficiency profile of domestic gas and oil boilers, and the mean SAP ratings for properties built between 1945 and 1964, tenement dwellings, as well as urban dwellings and those using gas as a primary heating fuel. As shown in Table 33, the mean modelled energy required to meet the fuel poverty heating regime for 2017 was: 26,586 kWh, compared to 26,644 kWh for 2016, a reduction of 0.2% which is not significant.

164. At the same time mean running costs have increased by 3.7% from £1,577 in 2016 to £1,634 in 2017, which reflects the overall increase in domestic fuel prices in 2017.

Table 33: Modelled Annual Energy Consumption and Running Costs, 2010- 2017

	Energy requirement		Running Costs
Year	Mean (kWh)	Annual change	Mean (£)	Annual change
2010	29,752	-	1,531	-
2011	28,881	-2.9%	1,594	4.1%
2012	28,077	-2.8%	1,704	6.9%
2013	27,425	-2.3%	1,764	-
2014	27,609	-	1,826	-
2015	27,398	-0.8%	1,709	-6.4%
2016	26,644	-2.7%	1,577	-7.7%
2017	26,586	-0.2%	1,634	3.7%

Fuel poverty energy requirement modelled on the following basis: 2003/4 – 2009: BREDEM – 12; 2010 – 2013: BREDEM 2012 v.1.0; 2014 -2017: BREDEM 2012 v.1.1. Fuel poverty costs as follows: 2011 and 2012 include WHD adjustment only; from 2013 onwards include WHD and price source adjustments; from 2016 a further improvement is included by assigning pre-payment metered fuel prices to the relevant households.

4.3.4 Impact on Fuel Poverty

165. To understand how the changes in the price of domestic fuels and the incomes of the households included in the SHCS sample interact with the performance of the housing stock, we carried out a micro-simulation which sought to isolate the impact of each set of factors on the level of fuel poverty recorded in 2017. The results are illustrated in Figure 22 and Table 34.

Figure 22. Contributions to Change in Fuel Poverty Rate between 2016 and 2017

166. The analysis which underpins these findings uses SHCS data from 2016 and 2017 to model hypothetical rates of fuel poverty under different scenarios, adding one change at a time. This included the following steps as shown in Table 34.

• First, 2017 fuel prices were applied to the 2016 survey sample to determine the effect of price change alone under 2016 levels of energy demand and household income. The 2017 survey is the second year fuel prices are applied by the presence of a prepayment meter, allowing a more detailed allocation of fuel price data to 2016.
• Next, the income of households in this sample was updated by the mean change observed for their decile group between 2016 and 2017. This demonstrated the additional effect of income changes on fuel poverty between 2016 and 2017.
• We then compare the fuel poverty rate modelled at the previous step with the estimate for 2017. The difference is therefore estimated to be the effect of the energy performance of the housing stock and other sampled housing stock changes between 2016 and 2017.^[46]

Table 34: Steps in Attributing Change in the Fuel Poverty Rate between 2016 and 2017

	Fuel Poverty Rate	Step Difference
Fuel Poverty 2016	26.5%
- Step 1: Fuel price change	27.4%	+0.9 points
- Step 2: Income change	24.3%	-3.1 points
- Step 3: Attributed to energy efficiency and other sampled housing stock changes	24.9%	+0.6 points
Fuel Poverty 2017	24.9%

167. The net change of 1.6 percentage points in the fuel poverty rate between 2016 and 2017 was not statistically significant. The results from the micro-simulation analysis indicate that increases in fuel prices and income combined would not have been sufficient to significantly change the fuel poverty rate. Applying fuel price changes increased the fuel poverty rate by 0.9 percentage points, and adding the income effect is estimated to have reduced the fuel poverty rate by 3.1 percentage points. Taking the income change alone would have resulted in a significant reduction in the fuel poverty rate, however.

168. The residual change is attributed to differences in the energy efficiency performance of the housing stock and other underlying changes to the sampled stock distribution, increasing the rate by 0.6 percentage points.

169. Caution should be applied in interpreting the residual stock effect. Overall, the energy efficiency of Scotland’s housing stock has improved: 42% of dwellings are rated EPC C or above in 2017 compared to 39% in 2016 (as measured by SAP 2012). Furthermore, modelled energy consumption has not changed between the two years, despite floor area increases in the sampled housing stock. However the 0.6 percentage point increase in the fuel poverty rate arising from energy efficiency and other changes in the sampled housing stock, suggests that improvements in energy efficiency of dwellings have been outweighed by other characteristics of the dwellings and households selected in the 2017 sample. This reflects more the annual variability in the sample survey design, where different dwelling and households are selected each year.

4.4 Characteristics of Fuel Poor Households

170. Figure 23 illustrates some of the key attributes of the fuel poor population in 2017. Approximately half (51%) of fuel poor households are older one- or two-person households. Around 11% of households living in fuel poverty are families with children, and 37% are other adult households without children.

Figure 23: Composition of Fuel Poor Households by Selected Household and Dwelling Characteristics, 2017

171. The large majority of fuel poor households are owner occupiers (57%), 28% are social housing residents and the remaining 16% rent in the private sector. 69% of fuel poor households live in houses – of which 26% are detached properties, 20% semi-detached, and 22% terraced – while the remaining 31% occupy flats.

172. One quarter (25%) of the dwellings of fuel poor households were built before 1919, and 16% were built since 1982. The remaining 59% were constructed in the intervening years.

4.4.1 Household Characteristics

173. Table 35 shows fuel poverty rates by a number of household characteristics for 2017 and in comparison to the previous year. The highest and lowest rates of fuel poverty by tenure are found in the private sector: 35% of outright owners but only 9% of those with a mortgage are assessed to be fuel poor. The 2017 fuel poverty rate for outright owners (35%) has remained similar to the 2016 rate (37%), reduced from 45% in 2015.

174. Older households make up a substantial part of those who own their property outright; they have generally lower income than working age households and their energy needs are assessed under an enhanced heating regime in accordance with the fuel poverty definition. The properties in which they live are often larger, requiring more energy to heat, and are more likely to be detached which leads to greater heat loss. Correspondingly, at 39%, older households have a higher fuel poverty rate than other household types.

175. On average the social and private housing sectors have similar rates of fuel poverty (27% and 24% respectively), in contrast to 2016 when the private sector had lower rates than the social sector following a noticeable decline in the fuel poverty rate for private sector households between 2015 and 2016. The similarity in 2017 rates is likely driven by a significant reduction in the fuel poverty rate in local authority housing (36% in 2016 to 28% in 2017).

176. As in previous years, fuel poverty has a strong association with income and households in the lower income bands have the highest rates of fuel poverty: 88% for the bottom income band and 51% for the 2^nd bottom band. Fuel poverty rates across all income bands are similar to 2016 fuel poverty rates.

Table 35: Fuel Poverty Rates by Household Characteristics, 2017 and 2016

	2017				2016
	000s		%	Sample	000s		%		Sample
Tenure
Owned outright	289	35%		1,075		296		37%		963
Mortgaged	60	9%		790		78		11%		794
LA/ public	104	28%		430		127		36%		411
HA/co-op	66	26%		283		73		27%		287
PRS	95	28%		361		74		23%		330
Private	444	24%		2,226		449		25%		2,087
Social	170	27%		713		200		32%		698
Household type
Older households	316		39%	1,001	311		41%		899
Families	70		12%	699	66		12%		628
Other households	228		21%	1,239	272		24%		1,258
Weekly Household Income
< £200	221		88%	307	263		87%		349
£200-300	209		51%	479	229		49%		506
£300-400	93		24%	446	94		24%		436
£400-500	49		15%	375	27		10%		311
£500-700	29		6%	543	28		6%		516
£700+	12		2%	789	7		1%		667
Council Tax Band
Band A	144		29%	592	172		33%		581
Band B	146		26%	652	172		29%		662
Band C	98		26%	453	92		27%		415
Band D	60		20%	370	59		18%		364
Band E	82		24%	420	90		27%		384
Band F	46		20%	264	36		18%		214
Band G – H	37		24%	186	28		20%		162
All Scotland	613		24.9%	2,939	649		26.5%		2,785

4.4.2 Dwelling Characteristics

177. Table 36 shows how the level of fuel poverty varies across dwelling characteristics.

178. The lowest rates of fuel poverty are associated with higher energy efficiency standards. Only 15% of households living in post-1982 dwellings and 13% of households living in dwellings rated C or better were fuel poor. Both of these categories have similar rates to their respective 2016 levels. Reductions in the fuel poverty rate have taken place among those living in terraced dwellings (down from 31% in 2016 to 25% in 2017), and dwellings built in the period 1945-1964 (down from 33% to 25%).

179. Households using gas as primary heating fuel have continued to see improving fuel poverty levels in 2017: 19% of these households are fuel poor, down from 23% in 2016, a decrease of 3 percentage points. This is likely to be at least in part due to gas prices continuing to fall in 2017, although not as steeply as in 2016. Consequently, the rates of fuel poverty for households within coverage of the gas network and for urban households have both decreased in 2017 by 3 percentage points, to 22% and 21% respectively. The large urban area household fuel poverty rate declined by 5 percentage points, from 22% to 17% in 2017.

180. However, the fuel poverty rate for households using oil as primary heating fuel has increased from 26% in 2016 to 40% in 2017. This is similar to estimated rates in 2012 and 2014 when liquid fuel prices were even higher. This year on year change is against a backdrop of rising liquid fuel prices in 2017, increasing by 24% on 2016. However, liquid fuel prices would have to increase by a further 45% to reach 2013 levels.

181. Moreover, while fuel poverty rates in 2017 for households outwith the gas network, and rural households have remained similar to 2016 levels, the remote rural fuel poverty rate has increased to 59% in 2017, up from 48% in 2016, reflecting their greater likelihood to use oil as heating fuel.

182. Levels of fuel poverty among households using electricity as primary heating fuel have remained among the highest, at 52%.

Table 36: Fuel Poverty by Dwelling Characteristics, 2017 and 2016

	2017			2016
	000s	%	Sample	000s	%	Sample
Dwelling Type
Detached	161	29%	817	159	28%	753
Semi	124	26%	645	126	27%	589
Terraced	136	25%	608	168	31%	614
Tenement	112	20%	499	109	19%	491
Other flats	80	26%	370	87	27%	338
Age of dwelling
pre-1919	154	33%	502	146	31%	513
1919-1944	83	29%	361	74	26%	321
1945-1964	136	25%	670	177	33%	629
1965-1982	142	28%	633	168	31%	614
post-1982	98	15%	773	84	14%	708
Primary Heating Fuel
Gas	379	19%	2,189	442	23%	2,051
Oil	58	40%	237	41	26%	260
Electric	151	52%	422	143	51%	389
Other	26	41%	91	23	37%	85
EPC Band (SAP 2012)
B - C	137	13%	1,129	137	14%	1,006
D	267	26%	1,239	313	29%	1,207
E	130	46%	396	133	42%	417
F - G	80	69%	175	66	66%	155
Location
Urban overall	438	21%	2,286	495	24%	2,135
Large urban areas	148	17%	801	190	22%	765
Other urban areas	191	22%	1,016	189	22%	910
Accessible urban areas	62	28%	297	72	32%	281
Remote small towns	37	42%	172	44	48%	179
Rural overall	175	43%	653	154	37%	650
Accessible rural	89	34%	330	81	31%	331
Remote rural	87	59%	323	73	48%	319
SIMD: Most deprived 15%
Yes	84	21%	393	122	31%	373
No	529	26%	2,546	527	26%	2,412
Gas Grid
On	449	22%	2,253	510	25%	2,128
Off	164	38%	686	139	34%	657
All Scotland	613	24.9%	2,939	649	26.5%	2,785

Note: Fuel poverty rates for the 15% most deprived areas showed in this table use the most recent SIMD publication available for the time period of the SHCS sample; figures for 2016 and 2017 are based on SIMD 2016 and the 2011 definition of Data Zones. Fuel poverty rates for urban and rural geographies are based on the 2013/14 classification, 2011 definition of Data Zones. For more information please refer to the Methodology notes.

4.5 Fuel Poverty and Income Poverty

183. Although fuel poverty is correlated with low income, it is not equivalent to income poverty. This section updates previous analysis of how these two conditions relate in the household population under the current fuel poverty definition.

184. According to the official poverty definition, individuals are considered to be in relative (income) poverty if their equivalised net household income is below 60 per cent of the median income in the same year. Official poverty estimates are calculated using the Department for Work and Pensions' (DWP) Family Resources Survey (FRS). The latest estimates for Scotland were published on 22 March 2018 and relate to 2016/17^[47].

185. It is possible to use the SHCS to determine how fuel poverty and income poverty relate, although there are some caveats to this approach. One of the main caveats is that the SHCS does not collect the full range of household income data used to derive the official measure of poverty. For example, income information is only collected for the Highest Income Householder and their spouse/partner. As a result, the SHCS would underestimate the income of households with more than two earners, and therefore over-estimate levels of income poverty. To correct to some extent for this we make a corresponding adjustment to the equivalisation method used for producing official poverty statistics. It is therefore important to note that the results presented here do not reproduce exactly the official measure of fuel poverty and are only approximate.

186. As in previous reports, the adjustment is applied to household income before housing costs (BHC). However for 2017, we make an additional adjustment before equivalising, by deducting council tax to match the definition of income used to derive fuel poverty estimates. This treatment of council tax is consistent with the DWP’s Household Below Average Income (HBAI) statistics income definition^[48]. The 2016 income poverty estimates in this report also reflect this approach, and will therefore not match last year’s report.

187. A further caveat is that the latest published income poverty estimates relate to 2016/17. In order to derive a poverty threshold figure for 2017 we use the relationship between the SHCS and the FRS estimates of the median equivalised household income for the previous year, 2016. We adjust the 2017 SHCS median by the ratio between the two estimates observed in 2016 to obtain a 2017 poverty threshold. We estimate this as £313 per week BHC for a couple without children. However, the actual FRS 2016/17 poverty threshold of £296 is used for 2016 data, which is also different to the threshold used for 2016 in the 2016 Key Findings Report - £291 in the 2016 report. As already noted above, the 2016 estimates presented here will therefore not match the previous report due to these methodological updates.

188. As Table 37a shows almost two-thirds of all fuel poor households would be considered poor in terms of their income (63% or 387,000) while the other third have incomes above the relative poverty threshold (37% or 227,000 households). This pattern is similar to 2016.

189. Table 37b shows the fuel poverty rate by income poverty status. 70% of income poor households were fuel poor in 2017, similar to 2016.

Table 37a: Estimated Number and Proportion of Households by Fuel Poverty and Income Poverty Status, SHCS 2016 and 2017

			Income Poor	Not Income Poor	All
2017	Fuel Poor	000s	387	227	613
		%	63%	37%	100%
	Not Fuel Poor	000s	169	1,681	1,850
		%	9%	91%	100%
	All	000s	556	1,908	2,464
2016*	Fuel Poor	000s	400	249	649
		%	62%	38%	100%
	Not Fuel Poor	000s	157	1,646	1,803
		%	9%	91%	100%
	All	000s	557	1,895	2,452

Table 37b: Fuel Poverty Rate (%) by Income Poverty, SHCS 2016 and 2017

	2016*	2017
Income Poor	71.7%	69.6%
Not Income Poor	13.1%	11.9%
All	26.5%	24.9%

*2016 data revised to reflect updated methodology described in section 4.5.

190. Figure 24 sets out this information graphically. This chart demonstrates, that while low income is associated with fuel poverty, it is not equivalent. Almost 4 in 10 fuel poor households would not be considered income poor. Similarly, there are some income poor households who are unlikely to be struggling with their fuel bills with around 3 in 10 income poor households not being fuel poor.

Figure 24: Fuel Poor and Income Poor Households, SHCS 2017

191. Table 38 provides further information about the characteristics of the households who fall into the different sub-groups. Households that are both income poor and fuel poor tend to live in more energy efficient dwellings than other fuel poor households, potentially because of high energy efficiency standards in the social rented sector. They are more likely to use gas for heating and live in urban locations. These characteristics point to low income as a key reason for their experience of fuel poverty.

192. On the other hand, those who are not poor but experience fuel poverty have high likelihood of living in low energy efficiency properties, more than other fuel poor households and well in excess of the average for Scotland. Among these households the share of electricity use for heating is higher and the use of mains gas is lower. Such households are more likely to live in rural locations and include a higher share of older households compared to other fuel poor households and the rest of Scotland.

Table 38: Household and Dwelling Characteristics by Poverty and Fuel Poverty, 2017

		Fuel, not Income Poor	Fuel & Income Poor	All Fuel Poor	Income, not Fuel Poor	All Scotland
EPC Band (SAP 2012)
B-C	000s	17	120	137	117	1,041
	col %	7%	31%	22%	69%	42%
D	000s	90	177	267	46	1,027
	col %	40%	46%	43%	27%	42%
E-G	000s	120	90	210	6	395
	col %	53%	23%	34%	3%	16%
Household Type
Older	000s	126	190	316	52	805
	col %	56%	49%	51%	31%	33%
Families	000s	23	47	70	63	593
	col %	10%	12%	11%	37%	24%
Other	000s	77	150	228	54	1,065
	col %	34%	39%	37%	32%	43%
Urban-Rural
Urban	000s	133	305	438	155	2,052
	col %	59%	79%	71%	92%	83%
Rural	000s	93	82	175	14	412
	col %	41%	21%	29%	8%	17%
Primary Heating Fuel
Gas	000s	107	272	379	154	1,966
	col %	47%	70%	62%	91%	80%
Oil	000s	29	28	58	*	144
	col %	13%	7%	9%	*	6%
Electric	000s	75	76	151	8	291
	col %	33%	20%	25%	4%	12%
Other fuels	000s	16	10	26	*	62
	col %	7%	3%	4%	*	3%
Gas Grid
On grid	000s	136	313	449	155	2,033
	col %	60%	81%	73%	92%	83%
Off grid	000s	90	74	164	14	431
	col %	40%	19%	27%	8%	17%
Sample size		329	484	813	180	2,939