Fuel Poverty: Potentially Inconsistent Indicators and Where Next?

Abstract

The measurement of fuel poverty is critical for judgements about the significance of the problem and the design of policies to address it. Reducing fuel poverty has been a government objective in the UK for many years, and is generally seen through the lens of the government’s official fuel poverty statistics . We compare the households identified as fuel poor according to three metrics: (i) the 10% indicator; (ii) the Low Income High Consumption indicator; and (iii) whether households self-report an inability to afford to keep their home warm, using data from the British Household Panel Survey. We find substantial differences in the households identified according to each of these indicators; this highlights a lack of clarity about which households might be considered truly fuel poor. In particular, a surprisingly low proportion of those identified by the 10% and LIHC indicators report an inability to afford to keep their home warm. While this could raise concerns that current fuel poverty policies in the UK are misdirected, instead we emphasize the difficulties of drawing policy conclusions from the differences between the indicators, unless it can be combined with information on households’ heating preferences and the in-home temperatures achieved.

Keywords: Fuel Poverty, Energy Poverty, Measurement Issues, United Kingdom, British Household Panel Survey, Subjective Well-Being

JEL Classification: Q48, L94, L95, L98, I31, I32, D63, D30