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Publication - Progress report

A Scotland without fuel poverty is a fairer Scotland: report

Published
24 October 2016
Topic
Housing
ISBN
9781786525413

Report by the Scottish Fuel Poverty Strategic Working Group proposing a fresh approach to delivering affordable warmth and energy use in Scotland.

View supporting documents Supporting documents

Appendix 7: Other definitions / indicators of fuel poverty

Low Income High Costs Indicator (England)

The SWG considered the Low Income High Costs ( LIHC) indicator, which has been used in England since 2013 following the Hills Review. [125] LIHC defines the problem of fuel poverty as, "a household is considered to be fuel poor if 1) they have required fuel costs that are above average (the national median level); and 2) were they to spend that amount, they would be left with a residual income below the official poverty line. The indicator measures the extent of fuel poverty in society, and the depth of fuel poverty - or the reduction in energy costs - that would lift a household out of fuel poverty.

The following concerns [126] and proposed improvements [127] for the LIHC indicator have been identified:

Concerns
  • The application of the low income high costs definition relies on statistics that do not reflect the real situations of households through casework on the ground. Therefore it fails to identify the source of the problem and is a poor guide for action.
  • The fuel poor/income poor matrix is too simplistic and may have unintended consequences for those who are above the poverty line but struggle to pay their household bills.
  • The LIHC calculation under-estimates the extent of fuel poverty, especially among those in smaller properties, whose fuel costs are not above the median, but who have energy inefficient homes.
  • TheLIHC measure does not identify households who have energy bills below the median but who could have still lower energy costs if they could afford to put in place energy efficiency measures.
  • It does not highlight the effects on affordability of rising fuel prices.
  • LIHC estimates of fuel poverty have a poor correlation with low energy efficiency ratings in properties.
  • The LIHC indicator fails to identify people in very cold homes and/or with the greatest under-spending on heating.
Improvements
  • Adjust (equivalise) the energy costs measure not by household type but by household size (number of persons) and by dwelling size (floor area).
  • Use a different energy cost threshold which takes into account cases where the occupant could achieve a reduction (e.g. set at 10%) in energy costs with energy efficiency measures.

International experience

While the SWG was not able to review international experience in tackling fuel and energy poverty, the following reports will be of use in developing the new fuel poverty strategy, including the review of the definition:

  • Fuel Poverty in Europe: A rapid evidence review of existing knowledge and approaches, 2013, by Harriet Thomson.
  • Fuel Poverty 1991 - 2012: commemorating 21 years of action, policy and research, Ryan Walker, Harriet Thomson and Christine Liddell.

The European Commission have published a report on indicators to measure energy poverty which may be useful:

Main report:
https://ec.europa.eu/energy/sites/ener/files/documents/Selecting%20Indicators%20to%20Measure%20Energy%20Poverty.pdf

Technical report:
https://ec.europa.eu/energy/sites/ener/files/documents/Annex%201%20Methodology%20and%20Technical%20Report.pdf

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