Fuel Poverty Awareness Day this year coincides with the announcement of the UK Budget on the 26th November. Much of our equity research at the Energy Demand Reduction Centre (EDRC) has focused on understanding how people experience fuel poverty, its rise after energy price increases, and the policy options for addressing this seemingly intractable issue.
Evidence-based solutions for fuel poverty: EDRC research recommendations for the Budget
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What EDRC research shows
EDRC’s Equity theme is building a comprehensive framework for understanding energy-related inequities. Our research – including on the impact of fuel and transport poverty on groups with protected characteristics, the Problem and Solution Framework project and what energy equity means for different groups – reveals that the experience of fuel poverty stems from intersecting structural issues. These include poor housing, low incomes, low energy efficiency, and inequitable access to affordable energy services, to name but a few issues. EDRC research emphasises that effective policy responses to home energy injustice requires addressing these interconnected factors while ensuring vulnerable households benefit equitably from the energy transition.
EDRC’s research comparing approaches to support households in fuel poverty is striking and highlights important considerations and trade-offs emerging when fuel poverty support is funded from the government budget. Modelling a hypothetical £9 billion public investment pot revealed that direct bill support provides immediate temporary relief to all households identified as in need of support. On the other hand, energy efficiency investment (through improving home insultation and draught prevention) delivers lasting benefits but the reach of a fixed budget is smaller, while some households may also have to wait until their property is retrofitted. Direct bill support generates short-term economic gains peaking at £600 million annually, which quickly erode after government contributions end. Investing in energy efficiency measures creates more modest but permanent reductions in energy demand and bills.
This research concludes that, while direct support may be necessary near-term, longer-term investment should prioritise energy efficiency.
Policy options
The Budget presents an opportunity for fairness and equity in energy policy, by investing in sustained energy efficiency, lowering barriers for those who can’t easily access government schemes, and addressing structural inequities.
First, prioritise energy efficiency as the primary long-term strategy while maintaining targeted direct support for immediate relief. EDRC evidence demonstrates efficiency delivers sustained household income gains and demand reduction.
Second, ensure the most vulnerable households can access efficiency programs. Insulation and draught prevention measures deliver the greatest bill reductions and are difficult to access for those with protected characteristics who often rent and live in flats.
Third, address structural inequities in access to affordable energy services through bill design. At present, standing charges disproportionately affect fuel-poor households, and those without Smart Meters do not benefit from Time of Use Tariffs.
Our research suggests that evidence-based, targeted policies such as those highlighted in this article can deliver both immediate relief and lasting change for vulnerable households.
