Global Network for Advanced Management

Authors: John Hills
Topics: Energy, Fuel, Poverty, Heat, Health
Abstract: The review confirms that fuel poverty is a serious national problem and shows that it is set to rise rapidly. It affects people with low incomes and energy costs above typical levels. It proposes a new way of measuring the problem, focused both on the number of people affected and the severity of the problem they face. Using the proposed measure: Nearly 8 million people in England, within 2.7 million households, both had low incomes and faced high energy costs in 2009 (the most recent year with available data). These households faced costs to keep warm that added up to £1.1 billion more than middle or higher income people with typical costs. The review’s central projection is that this “fuel poverty gap” – already three-quarters higher than in 2003 – will rise by a further half, to £1.7 billion by 2016. This means fuel poor households will face costs nearly £600 a year higher on average than better-off households with typical costs. The report also argues that: Fuel poverty exacerbates other hardship faced by those on low incomes, has serious health effects (including contributing to extra deaths every winter), and acts as a block to efforts to cut carbon emissions. The current official way of measuring it, based on whether a household would need to spend more than 10 per cent of its income on energy, is flawed, giving a misleading impression of trends, excluding some affected by the problem at some times and including people with high incomes at others. Interventions targeted on the core of the problem – especially those that improve the energy efficiency of homes lived in by people with low incomes – can make a substantial difference, but the impact of those planned to be in place by 2016 is only to reduce the problem by a tenth.
Length: 3
Case Number: 4026
Teaching Note Availability: Yes