One million households still facing ‘extreme’ fuel poverty

• Average energy bills are double what they were before the energy crisis, meaning at least five million households* will continue to experience fuel poverty in 2023, according to a detailed data analysis by Friends of the Earth
• Of those, 1.1 million are feeling the effects of soaring bills most acutely, spending more than 20% of their disposable income on energy – pushing them into ‘extreme’ fuel poverty
• Older and disabled people are more likely to experience the most severe levels of hardship
• Friends of the Earth urges the government to invest in the long-term solutions that will keep people warm and well and lower bills for good, by prioritising the 3,321 most in-need neighbourhoods for a street-by-street insulation programme

Despite the extension of the government’s energy bills support scheme last week, new research reveals that at least five million (one in five)* households across England and Wales will continue to feel the harshest impacts of the energy crisis over the coming months and be forced to spend more than 10% of their disposable income just to stay warm.

The new analysis, published today by Friends of the Earth, finds that of the five million households that remain precariously exposed to financial difficulty and debt due to high energy bills, there are more than one million families and individuals facing the most extreme hardship, who are being forced to part with a staggering proportion of their disposable income just to power and heat their homes.

These households are paying upward of 20% of their disposable income towards energy costs – significantly higher than the 10% of income which is commonly used as a benchmark for indicating fuel poverty – which pushes them into the bounds of ‘extreme’ fuel poverty.

The data is being released as part of United for Warm Homes – a campaign recently launched by the environmental justice group – which is calling on the government to simultaneously lower energy bills and cut the harmful emissions that cause climate change by rapidly insulating the UK’s heat-leaking housing stock.  

Although the extension of the government’s energy price guarantee (EPG) scheme means people will be somewhat protected from an additional spike in energy prices, average bills remain double what they were before the energy crisis.

As part of the new analysis, Friends of the Earth split the households struggling most with energy affordability into bands by the proportion of their income spent on energy costs. The research finds that in 2023:

• 742,200 households will be paying between 20 – 30% of their income on energy costs, 196,500 will be paying between 30 – 40%, and a shocking 117,400 households will be paying more than 40%.
   
• The average disposable income of the 1.1 million households spending more than 20% of their income on energy is estimated at £14,005, which includes additional financial support given through benefits uplift and cost of living payments. These households predominantly sit in the least affluent fifth of society.
   
• The average disposable income of all five million households struggling overall – those spending 10% of their income or higher on energy costs – is £20,584, which is a third less than the national average.
   
• Two thirds of these households are also not on means-tested benefits, so are not entitled to any government support outside the energy price guarantee to help them weather soaring costs.  
   
• Those in fuel poverty are more likely to have higher energy costs than those who aren’t – some of which can be attributed to need, such as age or disability, or fuel type, such as oil or LPG gas, but poorly insulated homes are also likely a factor.
   
• Households spending over 20% of their income on energy are almost four times more likely to have a pre-payment meter, which typically charge at a higher rate than standard meters. 

Friends of the Earth’s analysis finds that older and disabled people are far more likely to pay a higher proportion of their income on energy costs.

With the data indicating that those in fuel poverty are earning a third less than the national average, Friends of the Earth has correlated this information with neighbourhood-level data on the areas where energy costs are above average. This finds that there are 3,231 fuel poverty hotspots across England and Wales.

The top three local authority areas with the highest number of neighbourhoods regarded as fuel poverty hotspots are Birmingham, Bradford and Sandwell – the top ten areas can be viewed on the Friends of the Earth website. There are six local authority areas where more than 40% of neighbourhoods fall into this category, including Sandwell, Birmingham, Wolverhampton, Walsall, Blaenau Gwent, and Bradford. The region with the highest number of hotspots is the West Midlands.

Friends of the Earth finds that the proportion of well insulated homes across these hotspot areas stands at only a third (34.8%), while around a fifth of homes lack basic insulation such as loft or cavity wall insulation. This illustrates the need to prioritise the most in-need neighbourhoods for a rapid street-by-street programme of free basic insulation, which should be followed up with deeper energy efficiency improvements so that all homes are insulated to EPC rating C standards within a decade. 

Sana Yusuf, warm homes campaigner at Friends of the Earth, said:

“The sheer number of people being forced to fork out on enormous energy costs – even with prices frozen by the government – is heartbreaking. While some people are risking their health, and even their lives, by keeping the heating off just to avoid paying unfair energy charges, others are racking up thousands of pounds in debt because they have no other choice if they want to stay warm and well.

“Alongside better targeted support, the government must address one of the key drivers behind our hyper-inflated bills – the UK’s poorly insulated housing stock. With so few homes properly insulated in the neighbourhoods struggling most, rolling out a rapid, street-by-street programme of insulation is vital. This will save people hundreds of pounds each year on their energy bills and reduce the harmful emissions that cause climate change.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, said:

“This new analysis confirms that even with an optimistic outlook for future energy prices and the government's financial support, the huge numbers of people living in cold, damp and draughty homes.
 

“The government must respond to this analysis, and other similar studies, by backing a twin-track approach of properly investing in insulating homes of those in fuel poverty and longer-term reform of Britain's broken energy system so that people living on low-incomes can access get to cheaper energy.”

ENDS

 

Notes:
 

*Friends of the Earth’s analysis provides the most accurate measure of fuel poverty available based on the latest energy price forecasts, and accounting for government support, as well as typical energy use by households. The full methodology is available in the policy briefing here.
 

The environmental justice organisation has also created a series of ‘pen portraits’ demonstrating the typical characteristics of households that are paying more than 10% of their income towards energy costs, which are divided into bands by the increasing proportion of disposable income spent – these can be viewed on the Friends of the Earth policy website.
 

Friends of the Earth is calling for a free, nationwide, street-by-street programme of insulation, starting with those most in need, is one of the quickest and cost-effective ways to lower energy bills – saving people hundreds of pounds every year – and help tackle the climate crisis.

In Wales, the group is urging the Welsh government to urgently roll out its Warm Homes programme, prioritising the most in-need households and neighbourhoods for insulation.