Fuel Poverty

[Andy Hunt]

Is it a figment of the imagination?

Does the depletion of finite natural resources, and the resultant increase in price of those which remain, result in increasing numbers of people suffering increased illness and premature death, due to being unable to afford them?

Or is it simply the case that those who can no longer afford hydrocarbons for their heating and lighting are simply too lazy or stupid to identify the cheaper substitutes which are obviously there for the taking?

Is burning the furniture simply the market in action, or does it hold some deeper meaning from which the future of humanity can be divined?

YOU DECIDE . . .

[landyowner]

Isn't it both?

Fuel poverty impacts people's lives in a negative way obviously, but if there are cheaper alternatives available then the free market is sort of working. The imperfections come from probably a large capital investment needed to make the switch, which if you're suffering from fuel poverty you more then likely do not have. So you end up in a catch-22 where you can neither pay for the expensive hydrocarbons or pay for the capital cost needed to transition to the cheaper alternative.

So in a way it is market failure negatively impacting on someone's life.

[RenewableCandy]

It's not just ordinary people who can't see what's coming, or take wrong decisions. It's also people who have more money and really should know better, such as for example our local council/HA, who systematically removed all HW tanks fom their housing stock, and at vast expense put in combi-boilers. Thus scuppering for years their chance to put in renewable water-heating.

[Tracy P]

I voted for yes, mostly thinking of those who would make the 'right' decisions if they could. Like my mum (would make the right decisions if Mike told her anyway!) She is an elderly lady in a council house. She doesn't get to make decisions on what companies she buys from, or insulation etc. I think they are taking pretty good care of her , but she can't live off her pension and heat the house.....being cold surely lowers quality of life? She can't simply burn her furniture, there is no fire!

[Keepz]

Is it a figment of the imagination?

Thought this was an interesting take, from today's Times; the author argues that it is an artificial construct of the way the Government defines fuel poverty.

Here's a riddle for you. How can a person move into poverty while becoming unambiguously better off?

Let's follow the fortunes of a hypothetical person named Mary. Mary lives alone and has an income of £500 a month. She spends £40 on domestic fuel and the remaining £460 on food, clothing and entertainment. Now suppose that Mary's circumstances change in two ways. First, her monthly income goes up to £600. Secondly, the price of fuel doubles, while the price of food, clothing, and entertainment stays the same. Is she better or worse off?

Let's do the calculation. If she is using the same amount of fuel as before, it now costs her £80 a month. Maintaining her consumption of food, clothing and entertainment will still cost £460.

This leads to a new monthly expenditure of £540 - £60 less than her new income of £600. Mary can consume exactly as she did before, but she now has a surplus that she can put away for a rainy day, or can splash out on more food, clothing and entertainment, or indeed fuel.

By any reasonable measure she is better off. Except according to the Government, which thinks that she is worse off, because she has moved into “fuel poverty” - which it defines as spending more than 10 per cent of household income on fuel.

If your income was £9,000 a month and you lived in a mansion that cost £1,000 a month to heat, you too would be in fuel poverty

Avoiding poverty should mean having a total income enough to cover fuel and other basic living costs. The proportion of that income which goes on fuel does not matter. Mary's example shows that a household can become better off even when the proportion it spends on fuel increases.

The Government's fixation with fuel poverty stands in the way of sensible policies on energy taxation. One of Gordon Brown's first acts on becoming Chancellor of the Exchequer in 1997 was to reduce VAT on domestic fuel. With the Government now committed to reducing carbon dioxide emissions, this should be reversed, with the increase to the full rate of VAT phased in gradually over a few years.

Vulnerable groups such as pensioners who would be particularly affected by an increase in fuel prices could be compensated - or indeed be made better off - by using part of the additional tax revenue. Imagine that Mary is a pensioner. Would it be a great injustice to her if she had to pay more for fuel, if at the same time she received an increase in her pension that more than compensates for it?

Dr Peter Sozou is a research Fellow at the London School of Economics

[Andy Hunt]

That's an interesting find Keepz - and makes a fairly unarguably reasonable point really.

Maybe the focus of 'fuel poverty' should be more on low-income households where no amount of expenditure is really enough to keep the vulnerable occupant(s) at a satisfactory level of thermal comfort.

Just today I heard an anecdote about a local health authority which had a £9 million surplus at the end of the year - after doing some research into the health benefits of improving the quality of housing, the authority decided to put all £9 million into improving the worst homes in their borough.

The new national indicator NI187 relating to fuel poverty defines it more broadly as 'low income households where the property is thermally inefficient'. Probably a more useful definition of fuel poverty, if somewhat more difficult to quantify.

[RenewableCandy]

That's made it rather tricky and I've already voted! It never occurred to me that someone would apply the "fuel poverty" equation to a household with an other-than-poverty income (i.e. not pensioners or on benefits or on some kind of top-up because of low wages).

[SunnyJim]

Well food poverty certainly exists....

http://news.bbc.co.uk/1/hi/world/south_asia/7557107.stm

An official in the Indian state of Bihar has come up with a new idea to encourage low caste poor people to cope with food shortages - rat meat.

[RenewableCandy]

Yeah I saw that too...yuck! I thought they were mostly veggies in India, mind.

[JohnB]

An official in the Indian state of Bihar has come up with a new idea to encourage low caste poor people to cope with food shortages - rat meat.

It was suggested that eating rats would help reduce the amount of grain lost to them, which seems logical. So presumably these would be wild rats, the sort that come into contact with sewage, nasty chemicals etc. Yum yum Then it was suggested they should be farmed, suggesting they would be bred specially for food, but surely that wouldn't solve the problem of the wild ones eating grain, and would need crops to be grown to feed them.

[SunnyJim]

Yeah I saw that too...yuck! I thought they were mostly veggies in India, mind.

Only if you can afford it.