Fuel Poverty

According to government data released in early 2023, 13.4 percent of households in the UK were in fuel poverty in 2022, some 3.26 million in total. That marked a rise from 13.1 percent in 2021, when 3.16 million households were in fuel poverty.

While energy costs have come down from their peak in late 2022, they still remain far higher than in 2020. Some more easing is expected, but costs are set to remain stubbornly high for most.

Nonetheless, projections show that fuel poverty will rise to 3.53 million in 2023.

What is fuel poverty?

Most of us would define fuel poverty as simply not being able to afford to keep your home warm.

But there is an official definition: a household is said to be fuel poor if it has above-average energy costs, and if paying those costs would push it below the poverty line as far as its remaining income was concerned. A house that spends at least 10 percent on its fuel costs is considered to be in fuel poverty.

There’s also something called the poverty fuel gap. This is the difference between a fuel-poor household’s energy bill and the size of bill it would need to have in order not to be classified as fuel poor. That gap stood at £338 in 2022, up a massive 33 percent, from £251 in 2021.

How many people are in fuel poverty in the UK?

As of 2022, some 3.26 million households in the UK were in fuel poverty according to government statistics.

However, some believe this figure is a massive underestimate. The charity National Energy Action believes as many as 7.5 million households were in fuel poverty as of April 2023. The discrepancy is due to the fact that low income households with low energy efficiency are officially rated as being fuel poor, while those with highly energy efficient homes but with low income are not.

Rising energy costs have hit everyone hard since 2021 and it’s clear that the poorest households are having to spend an ever greater proportion of their income on electricity and gas. Thankfully, prices appear to be falling back, although they remain some way off where they were in 2020.

How is fuel poverty calculated?

Fuel poverty is officially calculated using the Low Income Low Energy Efficiency (LILEE) metric. This takes into account both low income and the fact that most poor households live in homes that have low energy efficiency.

The problem here is that, due to fast rising energy costs, even those on low incomes but in highly efficient homes are being dragged into fuel poverty, but are not being included in official statistics.

What causes fuel poverty?

Whether or not a household is classed as fuel poor depends on the following factors:

• Fuel prices: As you’d expect, these play a big role in fuel poverty. In normal circumstances, our energy bills are usually mitigated a little by the price caps introduced by Ofgem, the energy market regulator. However, unprecedented circumstances in the energy market mean that the cost of energy has surged since 2021. And while the cap has come down and prices have eased a little, the cost of energy remains prohibitively high for millions of people

It’s usually the case that households can shop around for fixed-price tariffs that are significantly lower than the price caps, helping to reduce their energy spending even further. But right now switching may not be possible, and staying on the standard variable tariff is likely to be cheaper.

• Household income: Lower income households are likely to spend a higher portion of their budget on fuel, and as a result, the leftover income is low enough to place the household below the poverty threshold.

• Energy efficiency: In homes that aren’t using energy efficiently, there’s a bigger chance that energy is being wasted. This means the household is having to spend more to keep the homes warm.

Who’s affected by fuel poverty?

Fuel poverty affects those who are unemployed or on low incomes, and those living in energy-inefficient properties. However, rising costs have started to hit those on middle incomes too.

The government has said that the energy price caps have helped to reduce energy costs, and that the introduction of the National Living Wage has helped to increase the income of low-income families.

It also says progress is being made in raising the number of fuel-poor households living in energy-efficient homes.

The Fuel Poverty Energy Efficiency Rating system measures the energy efficiency of a property, ranking dwellings from A to G, with A being the most efficient and G being the lowest.

What are the signs of fuel poverty?

There are lots of signs to look out for if you’re worried that you or someone you know is falling into fuel poverty. This includes:

• Not turning on the heating during cold spells

• Wearing lots of layers inside when it’s cold outside

• Ignoring bills

• Becoming stressed about the rising cost of energy

Remember, it’s best to speak with your supplier if you’re worried about paying your bills, as there is lots of government and private support available

What help is available for fuel poor households?

If you’re struggling to keep up with your energy costs, you should remember that your energy provider won’t immediately cut off your supply. There are likely to be warning steps involved – for example, if you miss a bill payment, you’ll be sent a postal reminder after 14 days. This is generally followed by further correspondence and potentially even a home visit if the issue hasn’t been resolved.

That’s why it’s important to keep in contact with your supplier if you miss, or are in danger of missing a payment – they may be able to give you advice, or help you find a way to manage your payments. You might also benefit from one of the government’s schemes designed to assist people who struggle with their energy bills.

You might also benefit from one of the government’s schemes designed to assist people who struggle with their energy bills.

For the full lowdown of what’s available, read our guide to getting help with your energy bills.

Let’s take a look at some of the schemes available.

Winter fuel payments

You could get between £250 and £600 to help you with your energy bills through the winter fuel payments scheme if you were born before 26 September 1956.

If you are eligible and you receive a social security benefit, such as a state pension, then you’ll usually get this as an automatic payment.

Read our winter fuel payment guide for more information about what’s being offered and whether or not you qualify.

Cold weather payments

Cold weather payments are part of another government scheme that gives eligible people £25 for every period of seven days where the temperature reaches zero degrees Celsius or below. You might qualify for these payments if you receive:

• Income support

• Income-based jobseeker’s allowance

• Income-related employment and support allowance

• Universal credit

• Pension credit

Find out more about eligibility and what you receive with our guide to cold weather payments.

Warm home discount scheme

The warm home discount scheme offers to help you with your energy bill, giving you up to £150 as a one-time discount. The money isn’t paid to you directly – it’s taken off your electricity bill sometime between October and March instead.

You’ll either be eligible through the guaranteed credit element of Pension Credit, or you’ll qualify if you’re on a low income and you meet the standards set out by your supplier – if they’re involved in the scheme. Take a look at our warm home discount scheme guide to see what suppliers are taking part and what criteria you may have to meet.

Talk to your suppliers

You can always talk to your suppliers and ask them for advice on reducing your energy costs because energy companies are now being encouraged by the government to help their customers save money on fuel bills under the Energy Company Obligation (ECO).

What can you do at home to fight fuel poverty?

While there are government schemes that might be able to help with your fuel payments, there are things you can do at home to help cut energy costs.

Some of the most common ways to cut your energy bill include turning appliances off at the plug instead of leaving them on standby, washing clothes at a lower setting, and using insulation tape or other barriers to keep out draughts coming through doors and windows.

For more ways to cut the costs of your energy bills, have a look at our energy saving tips.

Prepayment meters

If you’re struggling to pay your energy bills, you may have the option of swapping over to a prepayment meter. This lets you top up your home’s energy in a similar way to how pay-as-you-go phone plans work, so you pay for the energy you use, and you only use the energy you’ve already paid for.

Prepayment meter tariffs tend to be more expensive than credit tariffs, but they can help with budgeting if money is tight. Today’s meters can usually be topped up online or with a card that’s loaded at participating retailer.

Read our guide to prepayment meters to see if this is the right option for you.

Energy Saving Trust

The Energy Saving Trust can also help if you’re looking for free and impartial advice on how to cut your energy bills down and lower your emissions – you can call them on 0300 123 1234 at the national call rate.

Finding a better gas and electricity deal

Unprecedented market conditions mean that cheap energy deals are hard to come by right now.  So it's hard to cut your bills by comparing tariffs and switching. 

However, in general and in more usual market conditions comparing gas and electricity providers can be a good way to save on your energy bills. 

All you need to do is give a few details about your home and the people in it, your current tariff, and your rough energy usage habits.

You’ll then be able to compare energy tariffs based on the estimated monthly and yearly costs, whether it’s a fixed or variable rate, any early exit fees attached, and the yearly savings you could make.

 Once you’ve found the tariff you think is best for you, you’ll be on your way to finding a better deal for your gas and electricity.

Switch with Energy Monitor

Switching your energy supplier is quicker and easier with MoneySuperMarket’s Energy Monitor. We’ll let you know as soon as there’s a cheaper tariff available for you, so you can effortlessly switch.