Scottish house condition survey: 2018 key findings

4 Fuel Poverty

Key Points

• In July 2019 the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act^[44] received Royal Assent. This Act contains a new definition of fuel poverty which affects how fuel poverty is to be defined and measured. The figures presented in this report are a best estimate of fuel poverty and extreme fuel poverty rates under the proposed new definition of fuel poverty, following amendments agreed at Stage 2 of the Fuel Poverty (Targets, Definition and Strategy) Bill.
• The first set of fuel poverty estimates fully compatible with all of the elements of the new definition in the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act are expected to be published in December 2021. This requires additional information being collected in the 2020 Scottish House Condition Survey and the production of a new Minimum Income Standard (MIS) for Remote Rural, Remote Small Town and Island areas, which, for the Stage 2 estimates contained in this publication, has been estimated based on previous studies.
• In 2018, 25.0% of households (619,000) were estimated to be in fuel poverty, a similar level to 2017 (23.7% or 583,000 households). 11.3% (or 279,000 households, a subset of the 619,000 in fuel poverty) were living in extreme fuel poverty in 2018. The rate of extreme fuel poverty has been decreasing since 2013 (16.0%) and is the lowest rate recorded by the survey since 2012, the first year of data available under the new definition.
• The 2018 fuel poverty rate is likely to reflect changes in fuel prices, income and energy efficiency.
• The actual median fuel poverty gap for fuel poor households in 2018 was similar to 2017 (£650 and £690, respectively). The median fuel poverty gap (adjusted for 2015 prices) for fuel poor households in 2018 (£610) has decreased from £710 in 2012.
• Between 2017 and 2018 rates of fuel poverty increased in large urban areas (from 21% to 25%), decreasing the gap when comparing urban (25%) to rural areas (27%).
• Rates of fuel poverty differed between the social (39%) and private sector (20%) in 2018. These are similar rates to those in 2017 although households who owned outright saw an increase in fuel poverty rates with 23% estimated to be in fuel poverty compared to 18% in 2017.
• As in 2017, overall rates of extreme fuel poverty were similar between the social (13%) and private sector (10%) in 2018, although levels of extreme fuel poverty in housing association households have decreased from 18% in 2017 to 11% in 2018.
• Levels of extreme fuel poverty were higher in rural areas (17%) compared to urban areas (10%) in 2018.
• Older households and other households (both 13%) in 2018 have a higher extreme fuel poverty rate than families (6%).
• Extreme fuel poverty rates in the second lowest income band (£200-£299.99 a week) have dropped in 2018 (16%) compared to 2017 (22%).
• For both fuel poor and extreme fuel poor households, the lowest rates of fuel poverty are associated with higher energy efficiency standards. Only 19% of households living in post-1982 dwellings or in dwellings rated C or better were fuel poor with 7% and 6% of households living in post-1982 dwellings or dwellings rated C or better, respectively, in extreme fuel poverty.
• 69% of fuel poor households are also income poor. This is similar to 2017 (71%).

Figure 18: Fuel Poverty and Extreme Fuel Poverty since 2012

Note: Energy requirement underpinning fuel poverty estimate modelled on the following basis: 2012 – 2013: BREDEM 2012 v.1.0; from 2014 onwards: BREDEM 2012 v.1.1, and New Prices to the adjustment of fuel price sources from 2013. From 2016 a further improvement is included by assigning pre-payment metered fuel prices to the relevant households.

Note: This is the first time the 2012-2015 estimates have been published and the estimates are not comparable to those in previous Key Findings reports. See Section 4.1 for more details.

4.1 Definition and Measurement of Fuel Poverty

152. 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^[45]. 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 was confirmed by 2016 and 2017 fuel poverty rates, under the old definition of fuel poverty, of 26.5% and 24.9% respectively.

153. The Fuel Poverty (Targets, Definition and Strategy)(Scotland) Bill^[46] was introduced to the Scottish Parliament on 26 June 2018 and the Fuel Poverty (Targets, Definition and Strategy)(Scotland) Act 2019^[47] received Royal Assent on 18th July 2019. This includes a new definition of fuel poverty based on advice from an independent panel of experts and further scrutiny and amendment by the Scottish Parliament.

154. As set out in section 3 of the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act, a household is in fuel poverty if, in order to maintain a satisfactory heating regime, total fuel costs necessary for the home are more than 10% of the household’s adjusted net income (after housing costs), and if after deducting fuel costs, benefits received for a care need or disability and childcare costs, the household’s remaining adjusted net income is insufficient to maintain an acceptable standard of living. The remaining adjusted net income must be at least 90% of the UK Minimum Income Standard^[48] to be considered an acceptable standard of living, with an additional amount added for households in remote rural, remote small town and island areas.

155. Extreme fuel poverty follows the same definition except that a household would have to spend more than 20% of its adjusted net income (after housing costs) on total fuel costs and maintain a satisfactory heating regime.

156. Where a household is in fuel poverty, the fuel poverty gap is the annual amount that would be required to move the household out of fuel poverty. This is either:

• the amount required so that the fuel costs necessary for the home are no longer more than 10% of the household’s adjusted net income (after housing costs), or
• the amount required which, after deducting fuel costs, benefits received for a care need or disability and childcare costs, means the household’s remaining adjusted net income is sufficient to maintain an acceptable standard of living.

The figure taken to determine the gap for each household is the lower of the two options.

157. The Fuel Poverty (Targets, Definition and Strategy)(Scotland) Act 2019 also set targets to eradicate fuel poverty. The 2040 targets are that:

• no more than 5% of households in Scotland would be in fuel poverty
• no more than 1% of households in Scotland would be in extreme fuel poverty
• the median fuel poverty gap of households in Scotland in fuel poverty would be no more than £250 adjusted to take account of changes in the value of money.

158. The figures presented in this report are a best estimate of fuel poverty rates, extreme fuel poverty rates and the median fuel poverty gap under the proposed new definition of fuel poverty, following amendments agreed at Stage 2 of the Fuel Poverty (Targets, Definition and Strategy) Bill. Regulations regarding the application of enhanced heating regimes and uplifts to the Minimum Income Standard (MIS) for households living in remote rural, remote small towns, and island (RRRSTI) areas have been laid and are expecting to come into force early in 2020. The first set of fuel poverty estimates fully compatible with all of the elements of the new definition in the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act^[49], including the regulations above, will be published in the 2020 Key Findings report expected in December 2021. This requires additional information being collected in the 2020 Scottish House Condition Survey and the production of a new Minimum Income Standard (MIS) for Remote Rural, Remote Small Town and Island areas. The Minimum Income Standard (MIS) for Remote Rural, Remote Small Town and Island areas applied to the estimates in this publication have been estimated based on previous studies.

159. Due to the change in the underlying definition of fuel poverty, the estimates in this Key Findings report are not comparable to those in previous Key Findings reports. They are comparable to the estimates presented in the May 2019 publication titled: “Latest estimates of Fuel Poverty and Extreme Fuel Poverty – following Stage 2 of the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Bill”^[50]. This publication provides the first estimates under the new definition agreed at Stage 2 of the Bill process and also includes a comparison of fuel poverty rates between the old and new definition by various household and dwelling characteristics for 2016 and 2017, as well as 2015-2017 estimates by Local Authority areas.

160. Estimates include an uplift to the Minimum Income Standard (MIS)^[51] for households living in remote rural, remote small towns, and island (RRRSTI) areas, based on previous studies, as well as deducting from net household income (at part 2 of the definition, for the comparison to MIS) amounts received in care or disability benefits: Disability Living Allowance (DLA), Personal Independence Payments (PIP) and Attendance Allowance (AA).

161. For statistics in this publication, a satisfactory heating regime is defined as follows:

• For “vulnerable” households (those where at least one member is aged 75 or over, or at least one member has a long-term sickness or disability), 23°C in the living room (zone 1) and 20°C in other rooms (zone 2), for 16 hours every day.
• 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.

162. 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.

163. Figure 19 shows that in 2018, on average, around 75% of the modelled household energy demand was from space heating, 12% from water heating, 10% from lighting and appliance usage, and 3% was accounted for by cooking. These proportions are similar to 2017.

Figure 19: Mean Household Energy Consumption by End Use, 2018

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

164. 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^[52].

165. 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 2018, 19% of households in Scotland had a pre-payment meter (mains gas, electricity, or both).

166. The cost of the energy requirement includes an allowance for the bill rebate provided under the Warm Home Discount (WHD) scheme^[53]. It no longer includes the £12 contribution of the Government Electricity Rebate (GER) as the scheme only ran for two years (2014 and 2015)^[54].

4.2 Fuel Poverty and Extreme Fuel Poverty

167. In 2018 an estimated 25.0% of all households were in fuel poverty, around 619,000 households (Table 29). This is not statistically different to the 2017 fuel poverty rate of 23.7% (around 583,000 households).

168. The fuel poverty rate is lower than that recorded in the survey between 2012 and 2015.

169. Around 11.3% (279,000 households) were living in extreme fuel poverty in 2018 which is similar to the 11.9% (293,000 households) in the previous year. The rate of extreme fuel poverty has been decreasing since 2013 (16.0%) and is the lowest rate recorded by the survey since 2012, the first year of data available under the new definition.

Table 29: Estimates of Fuel Poverty and Extreme Fuel Poverty since 2012

	Fuel Poverty		Extreme Fuel Poverty
	000s	%	000s	%
2012	691	29.0%	361	15.1%
2013	761	31.7%	384	16.0%
2014	697	28.8%	368	15.2%
2015	675	27.7%	317	13.0%
2016	631	25.7%	308	12.6%
2017	583	23.7%	293	11.9%
2018	619	25.0%	279	11.3%

Note: There are some discontinuities in the underlying methods as follows: figures for 2012 allow for Warm Home Discount (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 Fuel Poverty Gap

170. Time trends in the fuel poverty gap have been presented as the median gap before adjustment and the median gap adjusted to 2015 prices. The median gap before adjustment presents the actual amount that fuel poor households require to move out of fuel poverty. The adjusted median gap figures have been presented in order to assess progress against the 2040 fuel poverty gap target. The adjustment has been made in alignment with the increases or decreases in the annual average consumer prices index (CPI)^[55] over the period from 2015 to the year which the figure relates to.

171. The median fuel poverty gap for fuel poor households is £650 in 2018
(Figure 20). There was little change in the median fuel poverty gap between 2012 and 2014 after which there was a fall in 2015. The gap has remained at a similar level since then.

172. The median fuel poverty gap (adjusted for 2015 prices) for fuel poor households has decreased from £710 in 2012 to £610 in 2018. There was little change in the gap between 2012 and 2014, followed by a fall in 2015. The gap was then similar until 2018 where there was a further fall compared to the previous year.

Figure 20: Median Fuel Poverty Gap of Fuel Poor Households, 2012-2018

4.4 Drivers and Trends

173. Fuel poverty is affected by levels of household income, the price of fuel required for space and water heating, the energy efficiency of housing and the use of fuel in households. Fuel poverty 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 7% 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.

174. Figure 21 and Table 30 show indexes constructed to compare trends in three key drivers of fuel poverty since 2012^[56]. 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 4.4.1. Prices and incomes are presented in nominal (cash) terms.

Figure 21: Trends in Fuel Price, Energy Efficiency and Median Income, 2012 to 2018

Note: All values indexed to 100 in 2012. Data for this chart are provided in Table 30. Fuel Price index constructed as described in section 4.3.1. Fuel poverty energy requirement modelled on the following basis: 2010 – 2013: BREDEM 2012 v.1.0; 2014 onwards: BREDEM 2012 v.1.1. from 2018 onwards there was a small update in the version of RdSAP underlying the energy modelling as described in section 3.3.

Fuel poverty costs as follows: 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.

175. Between 2012 and 2013 the rate of fuel poverty increased in line with the rise in the average fuel price index. In 2014 the rate of fuel poverty did not increase in line with the rise in the average fuel price index and there was an increase in median income which likely offset the fuel price increase. Between 2014 and 2016, the decline in the price of fuel and improvements in energy efficiency was reflected in a reduction in the fuel poverty rate. In 2017 there was an increase in median income and some improvements to energy efficiency, although fuel poverty rates remained similar to the previous year.

176. The 2018 fuel poverty rate (25.0%) is not significantly higher than 2017 (23.7%). In 2018 there were increases in fuel prices whilst median income and energy efficiency remained similar to 2017.

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
2012	29.0	100	122	100	80%	100	20,000	100
2013	31.7	109	130	107	81%	102	20,000	100
2014	28.8	99	135	111	79%	99	22,000	106
2015	27.7	96	128	105	80%	101	22,000	106
2016	25.7	89	121	99	83%	104	22,000	108
2017	23.7	82	122	100	84%	105	24,000	117
2018	25.0	86	129	106	85%	106	23,000	114

Sources: BEIS Quarterly Prices; SHCS.

Note: Fuel poverty rates shown on BREDEM 2012 basis (new energy model).

EE ratings shown on SAP 2009 basis up to 2013, SAP 2012 (RdSAP v9.92) basis between 2014 and 2017 and SAP 2012 (RdSAP v9.93) basis from 2018.

4.4.1 Fuel Costs

177. 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.

178. 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^[57] and produce an average index value for the price of the heating fuel requirement for Scotland. The results are shown in Figure 22 and Table 31.

179. Since the majority of Scottish households heat their properties with gas (81%), the national average index follows the gas index closely. 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%). The average index grew by a further 5.4% in 2018 with an increase in the price of all fuel types. The largest increases were in electricity (up 8.7%) and liquid fuels (25.3%).

Figure 22: BEIS Fuel Price Indices and a Weighted Average for Scotland: 2012 to September 2019

Table 31: BEIS Current Fuel Price Indices and a Weighted Average for Scotland: 2012 – September 2019

	Current fuel price indices
Year	Gas	Electricity	Liquid fuels	Solid fuels	Other fuels	Weighted Average
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
2018	127.4	148.1	113.3	117.9	138.0	128.5
to Sept 2019	128.8	158.4	109.9	121.1	143.8	130.6

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, 2012 to 2018. 2019 proportions assumed unchanged from 2018.

180. BEIS has published fuel price data up to September 2019. As fuel use changes slowly, we assume that the fuel mix in Scotland in 2019 was the same as captured by the 2018 SHCS in order to extend the weighted average for Scotland into 2019. Into the third quarter of 2019 the weighted average of heating fuels continues to rise, again driven by increases in prices for electricity (up 7.0%). This amounts to an approximately 1.6% increase in the composite price on average 2018 levels to September 2019.

4.4.2 Household Income

181. The SHCS is not designed to capture income as comprehensively as other formal surveys of income. From 2018, total household income has been collected in the survey on a self-reported basis. However, in order to provide a consistent time series of fuel poverty estimates for 2012 to 2018, we have only taken account of income from the highest income householder and their partner. We plan to introduce income from other household members, along with other developments under the new definition, in the 2020 Key Findings report. 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.

182. In 2018, 50% of households earned £23,300 or more after tax, similar to £23,800 in 2017 (Table 32). This median income has increased by 14% (around £3,000) in cash terms since 2012.

183. The mean income of the surveyed households were the same for 2017 and 2018. Percentage change in income across years varied across income deciles. Increases in income ranged between 1% in deciles 2 and 7 to 2% in deciles 8 and 9. Decreases in income ranged from -1% in deciles 3, 4 and 6 to -3% in decile 10. Median income decreased by 2%.

Table 32: Mean Annual Income in Each Decile Group, SHCS 2017 and 2018

Income Decile	Year		Percentage change
	2017	2018
1	£7,200	£7,000	-2%
2	£11,900	£11,900	1%
3	£14,900	£14,700	-1%
4	£18,200	£17,900	-1%
5	£21,800	£21,300	-2%
6	£25,700	£25,400	-1%
7	£30,700	£31,000	1%
8	£37,300	£38,200	2%
9	£46,100	£47,300	2%
10	£73,400	£71,500	-3%
All	£28,700	£28,600	0%
Median	£23,800	£23,300	-2%

4.4.3 Housing Stock

184. As shown in Table 33, the mean modelled energy required to meet the fuel poverty heating regime for 2018 was: 27,795 kWh, compared to 28,257 kWh for 2017, a reduction of 1.6% which is not significant.

185. Over the same time period, mean running costs have increased by 2.7%, although not significantly, from £1,665 in 2017 to £1,710 in 2018, which reflects the overall increase in domestic fuel prices in 2018.

Table 33: Modelled Annual Energy Consumption and Running Costs, 2012- 2018

	Energy requirement		Running Costs
Year	Mean (kWh)	Annual change	Mean (£)	Annual change
2012	29,621	-	1,727	-
2013	28,964	-2.2%	1,860	7.7%
2014	29,195	0.8%	1,898	2.1%
2015	29,068	-0.4%	1,745	-8.1%
2016	28,286	-2.7%	1,611	-7.7%
2017	28,257	-0.1%	1,665	3.4%
2018	27,795	-1.6%	1,710	2.7%

Fuel poverty energy requirement modelled on the following basis: 2012 – 2013: BREDEM 2012 v.1.0; 2014 -2018: BREDEM 2012 v.1.1. Fuel poverty costs as follows: 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.

Running costs reported for 2012-2017 will not match those previously published due to the change in the enhanced heating regime used for the best estimates of the new fuel poverty definition.

4.4.4 Impact on Fuel Poverty

186. 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 2018. The results are illustrated in Figure 23 and Table 34.

Figure 23. Contributions to Change in Fuel Poverty Rate between 2017 and 2018

187. The analysis which underpins these findings uses SHCS data from 2017 and 2018 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, 2018 fuel prices were applied to the 2017 survey sample to determine the effect of price change alone under 2017 levels of energy demand and household income. The 2018 survey is the third year fuel prices are applied by the presence of a prepayment meter, allowing a more detailed allocation of fuel price data to 2017.
• Next, the income of households in this sample was updated by the mean change observed for their decile group between 2017 and 2018. This demonstrated the additional effect of income changes on fuel poverty between 2017 and 2018.
• We then compare the fuel poverty rate modelled at the previous step with the estimate for 2018. The difference is therefore estimated to be the effect of the energy performance of the housing stock and other sampled housing stock changes between 2017 and 2018.^[58]

Table 34: Steps in Attributing Change in the Fuel Poverty Rate between 2017 and 2018

	Fuel Poverty Rate	Step Difference
Fuel Poverty 2017	23.7%
- Step 1: Fuel change	24.2%	+0.5 points
- Step 2: Income change	24.7%	+0.5 points
- Step 3: Attributed to energy efficiency change and other sampled housing stock changes	25.0%	+0.3 points
Fuel Poverty 2018	25.0%

188. The net change of 1.3 percentage points in the fuel poverty rate between 2017 and 2018 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 both fuel price and income changes increased the fuel poverty rate by 0.5 percentage points each.

189. 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 0.3 percentage points.

4.5 Characteristics of Fuel Poor Households

190. Figure 24 illustrates some of the key attributes of the fuel poor population in 2018. Approximately half (49%) of fuel poor households are other households without children. Around 15% of households living in fuel poverty are families with children, and 36% are older households.

Figure 24: Composition of Fuel Poor Households by Selected Household and Dwelling Characteristics, 2018

191. 43% of fuel poor households are owner occupiers, 41% are social housing residents and the remaining 16% rent in the private sector. 56% of fuel poor households live in houses – of which 15% are detached properties, 18% semi-detached, and 22% terraced – while the remaining 44% occupy flats.

192. Around one fifth (19%) of the dwellings of fuel poor households were built before 1919, and 20% were built since 1982. The remaining 60% were constructed in the intervening years.

4.5.1 Household Characteristics

193. Table 35 shows fuel poverty rates by a number of household characteristics for 2018 and in comparison to the previous year.

194. Overall rates of fuel poverty differed between the social (39%) and private sector (20%) in 2018. These are similar rates to those in 2017. The highest rates of fuel poverty by tenure are found in the social sector where 39% of local authority and housing association households are fuel poor. In comparison, only 10% of those with a mortgage are assessed to be fuel poor. The 2018 fuel poverty rate for outright owners (23%) is higher than the 2017 rate (18%).

195. As in 2017, older households (28%) and other households (27%) in 2018 have a higher fuel poverty rate than families (17%).

196. Fuel poverty has a strong association with income and households in the lower income bands have the highest rates of fuel poverty: 95% for the bottom income band and 55% for the 2^nd bottom band. Fuel poverty rates across all income bands are similar to 2017 fuel poverty rates.

197. Fuel poverty rates decrease as council tax bands increase from A (33%) to G-H (12%). Fuel poverty rates across council tax bands are generally similar to 2017 although the fuel poverty rate for households in council tax band D (22%) have increased compared to 2017 (16%).

Table 35: Fuel Poverty Rates by Household Characteristics, 2018 and 2017

	2018				2017
	000s		%	Sample	000s		%		Sample
Tenure
Owned outright	193	23%		1,065		150		18%		1,080
Mortgaged	74	10%		840		56		8%		792
LA/ public	160	39%		447		146		39%		431
HA/co-op	97	39%		266		99		39%		284
PRS	97	36%		287		132		39%		361
Private	363	20%		2,192		338		18%		2,233
Social	256	39%		713		245		39%		715
Household type
Older households	221		28%	950	211		26%		1,004
Families	94		17%	664	100		17%		701
Other households	304		27%	1,291	272		26%		1,243
Weekly Household Income
< £200	242		95%	281	240		93%		316
£200-300	235		55%	480	222		55%		479
£300-400	98		24%	464	83		22%		446
£400-500	35		12%	344	23		7%		375
£500-700	8		2%	506	12		3%		543
£700+	1		0%	830	2		0%		789
Council Tax Band
Band A	174		33%	587	173		34%		593
Band B	178		32%	642	172		31%		653
Band C	95		23%	477	90		24%		456
Band D	70		22%	386	50		16%		374
Band E	57		18%	392	52		15%		420
Band F	31		14%	269	26		12%		264
Band G – H	15		12%	152	20		13%		186
All Scotland	619		25.0%	2,905	583		23.7%		2,948

4.5.2 Dwelling Characteristics

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

199. The lowest rates of fuel poverty are associated with higher energy efficiency standards. Only 19% of households living in post-1982 dwellings and 19% of households living in dwellings rated C or better were fuel poor. Both of these categories have similar rates to their respective 2017 levels. In contrast, an increase in the fuel poverty rate have taken place among those living in dwellings with an EPC rating D (up from 23% in 2017 to 29% in 2018).

200. Households using gas (23%) as primary heating fuel have similar fuel poverty levels to that in 2017 (21%). Consequently, the rates of fuel poverty for households within coverage of the gas network and for urban (25% for both) households have both remained similar to rates in 2017 (23% for both on grid and urban) although the large urban area household fuel poverty rate increased by 4 percentage points, from 21% to 25% in 2018.

201. Fuel poverty rates for all other dwelling characteristics have remained similar between 2017 and 2018.

202. Although the fuel poverty rates for overall urban (25%) and rural (27%) households were similar, levels of fuel poverty in large urban (25%), other urban (24%), accessible urban (24%) and accessible rural areas (23%) were lower than levels in remote rural areas (33%).

203. Fuel poverty rates are lowest for detached households (17%). Levels of fuel poverty among households using electricity as primary heating fuel have remained among the highest, at 43%.

204. A higher proportion of households in the 15% most deprived areas (based on SIMD) were in fuel poverty compared to other areas of Scotland; 33% compared to 22% respectively.

Table 36: Fuel Poverty by Dwelling Characteristics, 2018 and 2017

	2018			2017
	000s	%	Sample	000s	%	Sample
Dwelling Type
Detached	94	17%	793	96	17%	818
Semi	112	22%	647	98	20%	648
Terraced	138	26%	626	134	25%	608
Tenement	175	31%	496	167	29%	503
Other flats	100	32%	343	88	28%	371
Age of dwelling
pre-1919	121	26%	512	115	25%	502
1919-1944	78	28%	318	85	29%	364
1945-1964	153	29%	643	144	27%	670
1965-1982	142	27%	646	120	23%	634
post-1982	125	19%	786	118	18%	778
Primary Heating Fuel
Gas	468	23%	2,189	414	21%	2,196
Oil	33	22%	257	39	27%	238
Electric	106	43%	386	110	38%	423
Other	13	24%	72	20	32%	91
EPC Band (SAP 2012)
B - C	213	19%	1,157	208	20%	1,136
D	283	29%	1,198	238	23%	1,241
E	87	31%	395	84	30%	396
F - G	36	35%	155	53	45%	175
Location
Urban overall	508	25%	2,242	464	23%	2,293
Large urban areas	222	25%	803	182	21%	804
Other urban areas	205	24%	981	195	23%	1,019
Accessible urban areas	54	24%	275	55	24%	298
Remote small towns	27	31%	183	32	36%	172
Rural overall	111	27%	663	119	29%	655
Accessible rural	62	23%	332	62	23%	332
Remote rural	49	33%	331	57	39%	323
SIMD: Most deprived 15%
Yes	136	33%	384	107	27%	394
No	483	23%	2,521	476	23%	2,554
Gas Grid
On	515	25%	2,190	473	23%	2,260
Off	104	23%	715	109	25%	688
All Scotland	619	25.0%	2,905	583	24.0%	2,948

Note: Fuel poverty rates for the 15% most deprived areas use the most recent SIMD publication available for the time period; 2017 and 2018 figures 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. Fuel poverty rates for EPC Band are based on SAP 2012 (RdSAP v9.92) to allow cross-year comparisons on the same underlying energy model.

There was one N/A response for Primary Heating Fuel which has been excluded from the table but included in the Scotland statistics.

4.6 Characteristics of Extreme Fuel Poor Households

205. Over half (52%) of extreme fuel poor households are adults without children households. Around 11% of households living in extreme fuel poverty are families with children, and 37% are older households.

206. Half (50%) of extreme fuel poor households are owner occupiers, 31% are social housing residents and the remaining 19% rent in the private sector. 61% of extreme fuel poor households live in houses – of which 23% are detached properties, 19% semi-detached, and 19% terraced – while the remaining 39% occupy flats.

207. Just under a third (29%) of the dwellings of extreme fuel poor households were built before 1919, and 16% were built since 1982. The remaining 55% were constructed in the intervening years.

4.6.1 Household Characteristics

208. Table 37 shows extreme fuel poverty rates by a number of household characteristics for 2018 and in comparison to the previous year.

209. Overall rates of extreme fuel poverty were similar between the social (13%) and private sector (10%) in 2018. These are similar rates to those in 2017. The highest rates of extreme fuel poverty by tenure are found in the private rented sector where 19% are extreme fuel poor. In comparison, only 4% of those with a mortgage are assessed to be extreme fuel poor. In general, the overall rates by tenure in 2018 were similar to that in 2017 with the exception of housing association households where rates of extreme fuel poverty have decreased from 18% in 2017 to 11% in 2018.

210. As in 2017, older households and other households (both 13%) in 2018 have a higher extreme fuel poverty rate than families (6%).

211. As with fuel poverty overall, extreme fuel poverty has a strong association with income. Households in the lower income bands have the highest rates of extreme fuel poverty: 68% for the bottom income band (<£200 a week) dropping to no cases in the highest income band (£700+ a week).

212. Extreme fuel poverty rates in the second lowest income band (£200-£299.99 a week) have dropped in 2018 (16%) compared to 2017 (22%). Extreme fuel poverty rates across all other income bands are similar to 2017 extreme fuel poverty rates.

213. Extreme fuel poverty rates were similar across council tax bands in 2018 (10-13%) and were similar to the rates in 2017 (8-15%).

Table 37: Extreme Fuel Poverty Rates by Household Characteristics, 2018 and 2017

	2018				2017
	000s		%	Sample	000s		%		Sample
Tenure
Owned outright	110	13%		1,065		88		11%		1,080
Mortgaged	29	4%		840		27		4%		792
LA/ public	61	15%		447		53		14%		431
HA/co-op	27	11%		266		45		18%		284
PRS	52	19%		287		80		24%		361
Private	191	10%		2,192		195		11%		2,233
Social	88	13%		713		98		16%		715
Household type
Older households	102		13%	950	119		15%		1,004
Families	32		6%	664	36		6%		701
Other households	145		13%	1,291	138		13%		1,243
Weekly Household Income
< £200	172		68%	281	172		67%		316
£200-300	67		16%	480	89		22%		479
£300-400	28		7%	464	23		6%		446
£400-500	*		*	344	6		2%		375
£500-700	*		*	506	*		*		543
£700+	-		-	830	*		*		789
Council Tax Band
Band A	66		13%	587	75		15%		593
Band B	69		12%	642	72		13%		653
Band C	43		11%	477	56		15%		456
Band D	34		11%	386	31		10%		374
Band E	32		10%	392	30		9%		420
Band F	22		10%	269	17		8%		264
Band G – H	13		11%	152	13		9%		186
All Scotland	279		11%	2,905	293		12%		2,948

Note: A * indicates suppressed data due to low sample sizes.

4.6.2 Dwelling Characteristics

214. Table 38 shows how the level of extreme fuel poverty varies across dwelling characteristics. Extreme fuel poverty rates for all dwelling characteristics have remained similar between 2017 and 2018.

215. The lowest rates of extreme fuel poverty are associated with higher energy efficiency standards. Only 7% of households living in post-1982 dwellings and 6% of households living in dwellings rated C or better were extreme fuel poor. Both of these categories have similar rates to their respective 2017 levels.

216. Extreme fuel poverty rates are similar across dwelling type (10-12%) and SIMD status (10-11%).

217. Households using gas (9%) as the primary heating fuel have the same extreme fuel poverty levels as in 2017 (9%). Consequently, the rates of extreme fuel poverty for households within coverage of the gas network and for urban (10% for both) households have both remained similar to rates in 2017 (11% and 10% for on grid and urban).

218. Levels of extreme fuel poverty among households using electricity as primary heating fuel have remained among the highest, at 27%. Households with an EPC rating of E (23%) or F-G (34%) or which are remote rural (23%), also have high levels of extreme fuel poverty.

219. Levels of extreme fuel poverty were higher in rural areas (17%) compared to urban areas (10%) in 2018. Fuel poverty rates were highest for remote rural households (23%) and lowest for other urban and accessible urban households (both 9%).

220. Although the fuel poverty rates for overall urban (25%) and rural (27%) households were similar, levels of fuel poverty in large urban (25%), other urban (24%), accessible urban (24%) and accessible rural areas (23%) were lower than levels in remote rural areas (33%).

Table 38: Extreme Fuel Poverty by Dwelling Characteristics, 2018 and 2017

	2018			2017
	000s	%	Sample	000s	%	Sample
Dwelling Type
Detached	63	11%	793	62	11%	818
Semi	53	11%	647	53	11%	648
Terraced	53	10%	626	55	10%	608
Tenement	71	12%	496	85	15%	503
Other flats	39	12%	343	38	12%	371
Age of dwelling
pre-1919	81	17%	512	76	16%	502
1919-1944	37	13%	318	47	16%	364
1945-1964	60	11%	643	60	11%	670
1965-1982	56	11%	646	54	11%	634
post-1982	44	7%	786	55	8%	778
Primary Heating Fuel
Gas	186	9%	2,189	178	9%	2,196
Oil	23	16%	257	27	18%	238
Electric	65	27%	386	77	26%	423
Other	5	10%	72	12	20%	91
EPC Band (SAP 2012)
B - C	65	6%	1,157	73	7%	1,136
D	115	12%	1,198	117	11%	1,241
E	64	23%	395	58	21%	396
F - G	35	34%	155	44	38%	175
Location
Urban overall	206	10%	2,242	215	10%	2,293
Large urban areas	90	10%	803	95	11%	804
Other urban areas	82	9%	981	79	9%	1,019
Accessible urban areas	21	9%	275	26	11%	298
Remote small towns	12	14%	183	16	18%	172
Rural overall	72	17%	663	78	19%	655
Accessible rural	39	14%	332	40	15%	332
Remote rural	34	23%	331	38	26%	323
SIMD: Most deprived 15%
Yes	236	11%	384	258	12%	394
No	43	10%	2,521	35	9%	2,554
Gas Grid
On	212	10%	2,190	221	11%	2,260
Off	67	15%	715	73	17%	688
All Scotland	279	11.0%	2,905	293	12.0%	2,948

Note: Extreme fuel poverty rates for the 15% most deprived areas use the most recent SIMD publication available for the time period; 2017 and 2018 figures are based on SIMD 2016 and the 2011 definition of Data Zones. Extreme 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. Extreme fuel poverty rates for EPC Band are based on SAP 2012 (RdSAP v9.92) to allow cross-year comparisons on the same underlying energy model.

There was one N/A response for Primary Heating Fuel which has been excluded from the table but included in the Scotland statistics.

4.7 Fuel Poverty and Income Poverty

221. 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.

222. 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 28 March 2019 and relate to 2017/18^[59].

223. 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 use the full range of household income data used to derive the official measure of poverty. For example, we have only taken account of income from the highest income householder and their spouse/partner^[60]. 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.

224. In this report, the adjustment has been applied to household income after housing costs (AHC) to better align with the new definition of fuel poverty which is based on income after housing costs. Therefore figures presented for 2017 in this report will not match that in the 2017 Key Findings report. From 2017, an additional adjustment is made 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^[61].

225. A further caveat is that the latest published income poverty estimates relate to 2017/18. In order to derive a poverty threshold figure for 2018 we use the relationship between the SHCS and the FRS estimates of the median equivalised household income for the previous year, 2017. We adjust the 2018 SHCS median by the ratio between the two estimates observed in 2017 to obtain a 2018 poverty threshold. We estimate this as £266 per week AHC for a couple without children. The actual FRS 2017/18 poverty threshold of £262 is used for 2017 data.

226. As Table 39a shows, over two-thirds of fuel poor households would be considered poor in terms of their income (69% or 425,000) while the other third have incomes above the relative poverty threshold (31% or 194,000 households).This pattern is similar to 2017.

227. Table 39b shows the fuel poverty rate by income poverty status. 89% of income poor households were fuel poor in 2018, a higher rate than in 2017 (84%).

Table 39a: Estimated Number and Proportion of Households by Fuel Poverty and Income Poverty Status, SHCS 2017 and 2018

			Income Poor	Not Income Poor	All
2017	Fuel Poor	000s	416	167	583
		%	71%	29%	100%
	Not Fuel Poor	000s	80	1,801	1,881
		%	4%	96%	100%
	All	000s	496	1,968	2,464
2018	Fuel Poor	000s	425	194	619
		%	69%	31%	100%
	Not Fuel Poor	000s	55	1,803	1,858
		%	3%	97%	100%
	All	000s	480	1,997	2,477

Table 39b: Fuel Poverty Rate (%) by Income Poverty, SHCS 2017 and 2018

	2017	2018
Income Poor	83.9%	88.6%
Not Income Poor	8.5%	9.7%
All	23.7%	25.0%

228. Figure 25 sets out this information graphically. This chart demonstrates, that while low income is associated with fuel poverty, it is not equivalent. Almost a third of 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 1 in 10 income poor households not being fuel poor.

Figure 25: Fuel Poor and Income Poor Households, SHCS 2018

229. Table 40 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, have a higher share of family households and live in urban locations compared to other fuel poor households. These characteristics point to low income as a key reason for their experience of fuel poverty.

230. On the other hand, those who are not income poor but experience fuel poverty have a high likelihood of living in low energy efficiency properties, more than other fuel poor households and 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 40: Household and Dwelling Characteristics by Poverty and Fuel Poverty, 2018

		Fuel, not Income Poor	Fuel & Income Poor	All Fuel Poor	Income, not Fuel Poor	All Scotland
EPC Band (SAP 2012)
B-C	000s	43	158	201	40	1,057
	col %	22%	37%	32%	73%	43%
D	000s	98	198	295	15	1,031
	col %	50%	47%	48%	27%	42%
E-G	000s	54	69	123	-	389
	col %	28%	16%	20%	-	16%
Household Type
Older	000s	85	136	221	7	783
	col %	44%	32%	36%	13%	32%
Families	000s	17	78	94	40	569
	col %	9%	18%	15%	72%	23%
Other	000s	93	211	304	8	1,125
	col %	48%	50%	49%	14%	45%
Urban-Rural
Urban	000s	150	358	508	51	2,059
	col %	77%	84%	82%	93%	83%
Rural	000s	44	67	111	4	419
	col %	23%	16%	18%	7%	17%
Primary Heating Fuel
Gas	000s	131	337	468	47	2,032
	col %	67%	79%	76%	85%	82%
Oil	000s	13	19	33	*	147
	col %	7%	5%	5%	*	6%
Electric	000s	45	61	106	*	244
	col %	23%	14%	17%	*	10%
Other fuels	000s	4	8	13	5	54
	col %	2%	2%	2%	9%	2%
Gas Grid
On grid	000s	153	362	515	50	2,032
	col %	79%	85%	83%	90%	82%
Off grid	000s	41	63	104	5	445
	col %	21%	15%	17%	10%	18%
Sample size		248	484	732	58	2,905

Note: There was one N/A response for Primary Heating Fuel which has been excluded from the table but included in the Scotland statistics. Breakdowns for EPC Band are based on SAP 2012 (RdSAP v9.93). A * indicates where data has been suppressed due to low sample numbers.