Appendix 7: Other definitions / indicators of fuel poverty
Low Income High Costs Indicator (England)
the Low Income High Costs (
which has been used in England since 2013 following the Hills
LIHC defines the
problem of fuel poverty as, "a household is considered to be fuel
poor if 1) they have required fuel costs that are above average
(the national median level); and 2) were they to spend that amount,
they would be left with a residual income below the official
poverty line. The indicator measures the extent of fuel poverty in
society, and the depth of fuel poverty - or the reduction in energy
costs - that would lift a household out of fuel poverty.
The following concerns
and proposed improvements
have been identified:
- The application of the low income high costs
definition relies on statistics that do not reflect the
real situations of households through casework on the
ground. Therefore it fails to identify the source of the
problem and is a poor guide for action.
- The fuel poor/income poor matrix is too simplistic
and may have unintended consequences for those who are
above the poverty line but struggle to pay their
calculation under-estimates the extent of fuel poverty,
especially among those in smaller properties, whose fuel
costs are not above the median, but who have energy
- TheLIHC measure does not identify households who have
energy bills below the median but who could have still
lower energy costs if they could afford to put in place
energy efficiency measures.
- It does not highlight the effects on affordability of
rising fuel prices.
estimates of fuel poverty have a poor correlation with
low energy efficiency ratings in properties.
indicator fails to identify people in very cold homes
and/or with the greatest under-spending on heating.
- Adjust (equivalise) the energy costs measure not by
household type but by household size (number of persons)
and by dwelling size (floor area).
- Use a different energy cost threshold which takes
into account cases where the occupant could achieve a
reduction (e.g. set at 10%) in energy costs with energy
SWG was not able
to review international experience in tackling fuel and energy
poverty, the following reports will be of use in developing the new
fuel poverty strategy, including the review of the definition:
- Fuel Poverty in Europe: A rapid evidence review of existing
knowledge and approaches, 2013, by Harriet Thomson.
- Fuel Poverty 1991 - 2012: commemorating 21 years of action,
policy and research, Ryan Walker, Harriet Thomson and Christine
The European Commission have published a report on indicators to
measure energy poverty which may be useful: