Definitions of fuel poverty: Implications for policy

This paper outlines why the definition of fuel poverty is important in policy formulation and describes how the Government's current definitions evolved from the original concept. It discusses the determination of income and fuel costs and the possibilities for a relative and common European measure. It examines problems inherent in assessing fuel costs as a percentage of income and puts forward the arguments for a ‘budget standard’ approach. The paper illustrates how the size of the problem depends on the definition and chosen threshold and suggests advantages for a rating scale. It illustrates how the income composition and thresholds also govern the distribution of the target populations and the relative importance of the main causal factors, and examines the consequent policy implications. It explores the definition of vulnerable households and the importance of severity and questions whether the UK fuel poverty strategy is targeted at households least able to afford their fuel costs (as the name implies) or primarily those at risk from excess winter and summer mortality and morbidity. Finally, after examining the role of supplementary indicators, it looks at the opportunities for changing the definition and comments on the Government review of the definition and targets. ► There are major failings in the existing official definitions of fuel poverty. ► expressing fuel costs as a percentage of income is a poor indicator of fuel poverty. ► A budget standard approach provides a more consistent, meaningful and fairer measure. ► The scale and nature of the problem changes dramatically with different definitions. ► The definition is crucial to the mix of policies and allocation of resources required.