Hills Review redefines fuel poverty

But does it point to further changes in energy policy, too?

15 March 2012

The final report of the Hills Fuel Poverty Review was published today (Thursday 15 March).

This follows the release in October last year of the Hills Review Interim Report which included the controversial proposal that the definition of fuel poverty should change (see our news story here).

The new definition will ‘combine a threshold of poverty (expressed as 60% of the median) as a proportion of ‘after-housing-costs’ income with a measure of high energy requirement expressed in monetary terms relative to the wider population’.

For those keener on the outcome than the semantics, the new definition will mean that come 2016 (when the UK’s targets were supposed to eradicate fuel poverty altogether) there will be 2.6m to 3m people in fuel poverty as opposed to around 8m under the old definition.

“This sounds as if the government is simply defining away the problem” said CSE’s Ian Preston. “But actually, the 3m people left are the most vulnerable and most in need of support, so we are broadly in favour of the new definition.”

The Hills Fuel Poverty Review, which can be downloaded from Decc’s website here, references two of CSE’s projects:
Understanding fuel expenditure: Fuel poverty and spending on fuel and
Understanding ‘High Use Low Income’ Energy Consumers.

Importantly, the report and the new definition has taken on board recommendations that CSE proposed as part of the consultation, which can be found here.

The Hills Review dedicates much space to the question of paying for fuel-poverty alleviation. This includes the thorny discussion of whether funds should come from taxation or from electricity bills. Professor Hills’ also recommends an ‘increase in the Affordable Warmth Component of the Energy Company Obligation (ECO)’ – in other words that more of the funds raised through the obligations on energy companies to facilitate the installation of energy efficiency measures in homes is directed at priority groups such as low-income families or elderly people on fixed incomes.

Interestingly enough, this would leave less ECO money available for carbon-reduction programmes like the Green Deal, and Ian Preston thinks this could be significant. “The short-fall for the Green Deal can’t come from energy bills (there’s a cap on this) and this government’s unlikely to fund the difference from general taxation. So Decc may cast an eye at the Winter Fuel Payment which, for all its inherent decency is widely considered to be poorly focussed on the most needy and not of long-term benefit.

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