Policy paper

Committee on Fuel Poverty: summer update

Published 22 August 2025

This update reflects the Committee on Fuel Poverty’s best technical assessment on the different components of fuel poverty, and the measures necessary to respond to those.

This note covers:

• The Headline statistics
• The Elimination of Fuel Poverty
• Capturing Fuel Poverty
• Energy Bill Support
• Standing Charges
• Warm Homes Discount
• Energy Efficiency – Warmer Homes
• The Private Rented Sector
• Targeting the Fuel Poor Households
• The Energy Transition
• Future bills – new tariffs

1. The headline statistics

The Annual Fuel Poverty statistics were published in March 2025.  The updated figures showed:

• a fall in the official levels of fuel poverty to 2.73 million, 11% of households, the lowest on record.
• The average fuel poverty gap fell by 4%, but still £407 per household.
• 59.5% of all low-income households now live in a property that is C rated or better.
• On affordability, the number of households required to spend more than 10% of their income (after housing costs) on energy increased to 8.99 million.

The statistics predicted that fuel poverty would increase marginally in 2025, although the fuel poverty gap per household would fall by 9% (about £40).  The number of low-income households in a C rated, or better, property would increase slightly.

Given the turmoil affecting the energy market of the past few years, and the lack of progress, this was a welcome, though modest, return to a downward trajectory in levels of fuel poverty in England.

2. The elimination of fuel poverty

Key message: Fuel Poverty can be beaten. Any strategy to tackle fuel poverty should be aligned with other government goals, such as the elimination of child poverty.

The Committee has always believed that well-directed programmes, based on good data, effective levers directed at the Private Rental Sector; and well-targeted bill support; can lift millions of households out of fuel poverty. This is evidenced by the continued falls in levels of fuel poverty throughout the Cameron and May governments, despite sustained periods of tight public finances. The shock of the energy price crisis, and the flatlining of the levels of fuel poverty, necessitated a rethink on the most effective, value for money, approach employed in energy efficiency programmes. Hopefully, this rethink will be evident in the revised Fuel Poverty Strategy.

Our 2024 Report recommended that efforts to tackle fuel poverty should align with policies that have similar goals, for example, the strategy to end child poverty.

The Committee, therefore, welcomes that the government’s Child Poverty Strategy is being renewed alongside the Fuel Poverty Strategy – both to be published later in the year.  The latest fuel poverty statistics showed that single parent households with children at home were 2 to 2.5 times more likely to be in fuel poverty as a household with person(s) over 60 with no children.  Notably, the lone parent household had a fuel poverty gap of approximately £500 – twice that of any other group.^{[footnote 1]}

Evidence from charities and government reports indicate that cold homes contribute to an extra health burden imposed on the NHS; and that children do not thrive to the same extent as other school pupils as a result of living in a cold home.

Therefore, any strategy to bear down on fuel poverty among lone parent households, also has benefits for the strategy to reduce child poverty, and vice versa.  Families become more financially stable, children make more progress, and households experience less cold-related illness. In short, this changes lives for the better and delivers value for money for the government and taxpayer. 

Key message: Tackling Fuel Poverty supports the government’s wider goals.

The Committee has always argued that bearing down on fuel poverty is best achieved via a cross-government partnership, with DESNZ, health, regional government, local government and their local partners in the third sector, each playing distinct but complementary roles.

A shared cross-government mission to reduce fuel poverty contributes to the government goal of more citizens living stable, comfortable lives that help them to progress and play a more active part in society. 

The macro effect of programmes dedicated to upgrading homes, with insulation and, where appropriate, green technologies, is to aid the development of supply chains, skills and sustainable, green jobs in every region of the country.

In its consultation on a new Fuel Poverty Strategy, the government noted an annual cost to the NHS of approximately £860m per year treating illness directly related to cold, damp and mould in homes. Damp and mould are now a housing priority, embodied in Awaab’s Law (the ‘Hazards in Social Housing (Prescribed Requirements) (England) Regulations 2025) recently laid before Parliament.  The evidence suggests that damp and mould thrive in homes that are not well ventilated and kept at a safe, healthy temperature of at least 180C.

Warmer homes, therefore, contribute to the government’s health goal of ending NHS backlogs, by reducing cold-related hospital visits during the winter months.

Finally, a comprehensive programme to eliminate cold homes contributes to the energy goals of protecting billpayers and accelerating the UK to net zero.

3. Capturing Fuel Poverty

Key message: The LILEE measure does not fully capture the full extent of households facing acute affordability problems in relation to energy but is helpful in directing effort towards cold homes.

Despite the welcome reduction in levels of fuel poverty to 2.73 million, our 2024 report observed that the huge spike in energy bills in 2023 led to a steady increase in household debt to energy companies. The latest Ofgem data indicated total household energy debt at the end of Q1 2025 affected almost 3.5million households and has now reached over £4.15 billion.

Given growing concerns about the affordability of energy bills that had mounted after Russia invaded Ukraine, the previous government included an affordability measure in the fuel poverty statistics to shed more light on the impact of energy prices on households.

The Fuel Poverty statistics produced in March 2025 reported:

These statistics also include an affordability measure of the number of households who are required to spend more than 10 per cent of their income (after housing costs) on domestic energy. In 2024, 36.3 per cent of households (8.99 million) exceeded this threshold, up from 35.5 per cent in 2023 (8.73 million).

This Committee reached the conclusion some time ago that LILLEE, whatever its merits, did need to be reviewed, because it did not fully describe the breadth of the affordability problems facing households.

However, the Committee recognises that one of the strengths of the LILLEE measure is in focusing the attention of energy efficiency programmes on tackling the most unacceptable homes first.

We believe this remains vital, for all the reasons stated elsewhere in this document.

Despite the welcome focus the LILLEE metric brings by twinning the lowest income households, living in the coldest homes, this Committee has identified in earlier reports that a wider measure of energy distress is necessary to fully capture the extent of fuel poverty/unaffordability to many lower income households.

4. Energy Bill support.

Key message: Targeted bill support for the poorest households will remain necessary for the foreseeable future.

At the time of writing, the Energy Price Cap for an average household is £1,720 per year, a fall of 7% on the previous quarter.  However, bills remain £152 more than this period in 2024, and £541 per year more than the last quarter of 2019 (pre pandemic).

The UK has moved beyond the previous government’s Energy Price Guarantee, which took effect when bills rose above £2,500. The UK also moved beyond the 2023/24 Cost of Living support scheme, which paid £900 in three tranches to low-income households.

Ofgem’s Debt Strategy published in December 2024, confirmed:

Over the last two years alone there has been a 91% increase in energy debt/arrears and the most recent data shows a record high of £3.82bn.

The report indicated approximately 3.4million accounts in debt; with over half having no arrangement to pay.

Our assumption is that fuel poor households are more vulnerable to debt of all kinds, including energy debt.

The Fuel Poverty Statistics (published March 2025, with data from 2024) reported:

the aggregate fuel poverty gap for England in 2024 was estimated at £1.11 billion under the LILEE metric, a fall of 7% since 2023 (£1.19 billion) in real terms. The average fuel poverty gap for England in 2024 (the reduction in fuel costs needed for a household to not be in fuel poverty) was estimated at £407, down by 4% in real terms since 2023.

Notably, the fuel poverty statistics published March 2021, with 2019 data, showed an average fuel poverty gap for England of £216 and, after a long period of stable energy prices, this gap was falling^{[footnote 2]}.

The reduction in the fuel poverty gap in the latest statistics is welcome.  However, the data shows a correlation between the increase in average energy bills post pandemic, and the size of the fuel poverty gap.

To express this another way, if energy prices today were £541 per year lower (average bills in autumn 2019), the £407 fuel poverty gap would disappear for most fuel poor households. They would no longer be in fuel poverty.

Assuming that energy bills do not fall by £541, and current levels are the new norm, until such time as those households see their homes upgraded to reduce their annual bills by £400+, they will continue to have unaffordable energy bills.

This reinforces the Committee’s conclusion that targeted bill support for fuel poor households will remain necessary for the foreseeable future, or until such time as all low-income households live in warm homes.

Key message: An updated Fuel Poverty Strategy must include a guarantee of affordable energy for all.

This recommendation from our annual report reflected the need to address the wider affordability and energy debt data that was emerging and is now included in the statistics.

The issue was exposed during debate on restricting the Winter Fuel Payment (WFP) to Pension Credit recipients.  Whilst, the Committee always regarded WFP as a poorly targeted payment, we did recognise that there is a cohort of people whose incomes place them above benefit levels yet, still face an affordability problem in relation to energy bills.

5. Standing charges

Key message: CFP Research shows standing charges are unfair to some low-income households.

Since our 2024 Annual Report, the Committee commissioned research on the structural impact of bills on the fuel poor.  Inevitably, most of the comment on changes to energy bills relates to the day-to-day unit costs which have risen substantially in recent years. 

This research looked at the fixed elements of the bills, the standing charges.

As a flat rate charge on every household, the standing charges are regressive in that, unlike income tax, they affect rich and poor to the same extent, irrespectively of actual consumption.  The research noted that spreading the cost of clean energy/nuclear subsidies across standing charges has an unequal effect on households.  The research noted:

Currently, the lowest-income 5% of households typically allocate 1.1% of their income to low-carbon policy costs, compared to 0.18% for the highest-income group.

 It further noted:

Therefore, those least able to pay are being disproportionately charged for net zero.

6. Warm Home Discount

Key message: Warm Home Discount makes an important contribution to bill support for fuel poor households.

The expanded Warm Home Discount (WHD), which benefitted 3.4 million households in 2023/24, is being offered to every household receiving a means-tested benefit, expected to benefit approximately 6.1 million households, an increase of 2.7 million households. 

WHD will now reach 1.8 million fuel poor households (66% of all fuel poor households), although because of the breadth of the groups offered the WHD, fuel poor households are a smaller share of the total recipients.

Whilst the number of beneficiaries has grown, in real terms WHD has declined in value, remaining at the level set in 2022, £150. 

In addition, the benefit per households is marginally reduced, as of the £150 received, the cost of the scheme is an additional £15 per household, increasing this element of the standing charge to £37.  So, barring any other mitigating savings which reduce standing charges, each fuel poor household will receive £15 less in net terms from the scheme going forward, than in 2023/24.

However, as a contribution to reducing fuel poverty and improving affordability, WHD is welcome.  The Committee supports that, unlike the Winter Fuel Payment (which may be spent on many things), WHD payments comes directly off energy bills.

Key message: Payments which directly reduce bills are the most efficient cash support to hard-pressed, energy bill payers. Every pound received reduces their bill/energy debt.

Successive governments have recognised that for a proportion of the population, some cash or bill support, particularly in the winter months, is necessary.

The Committee believes that any effective fuel poverty strategy must ensure energy bills are affordable for all.  As bills appear to be likely to remain in the current range +/- 10%, and therefore well above pre-pandemic levels for the foreseeable future; targeted cash support will remain important to low-income and vulnerable households at risk or in fuel poverty.

However, whatever form that bill support takes – whether it is Warm Home Discount, winter payments; a social tariff; or emergency topping up of prepayment meters; we favour cash support which directly comes off bills.

Evidence suggests that fuel poor households may well be vulnerable to other debts which competes with energy bills for payment.  Therefore, bill support which contributes to paying a current or future bill ensures that payment fulfils its purpose and is not diverted; leaving energy debts to grow.

7. Energy efficiency – Warmer Homes

Key message: Warm homes are central to ending fuel poverty. For the poorest households, to live in a cold home, is a punishing experience.

Cold homes are not a new phenomenon. Neither are they only seen in lower income neighbourhoods.  Age is a major factor, and large, middle-class homes, dating back to the 19th century or earlier, with low EPC ratings, are commonplace in England.

But the Committee’s Annual Report last year, identified a possible correlation between old homes (mainly built pre-WW2); in low-income neighbourhoods, commonly terraced or semi-detached housing constructed for working people, and former social housing (sold under right to buy in the 1980s or early 1990s) and high levels of fuel poverty.  Today, low-cost private landlords have proliferated in these neighbourhoods, compounding the weakness of the occupants to do anything about the condition of their home.

Using data from March 2025, but factoring the July-Sept 2025 energy price cap, Rightmove demonstrated how significant the EPC rating is to energy bills.

7.1 Average annual energy bill^{[footnote 3]}

Property type	EPC rating A	EPC rating B	EPC rating C	EPC rating D	EPC rating E	EPC rating F	EPC rating G
1-bed flat	£495	£817	£1,249	£1,804	£2,432	£3,025	£3,884
2-bed flat	£475	£960	£1,452	£2,132	£2,955	£3,795	£4,895
3-bed terraced house	£479	£1,041	£1,797	£2,542	£3,508	£4,452	£5,735
1 bed flat	£438	£1,023	£1,831	£2,536	£3,499	£4,559	£5,541

For example, the energy bills of a 3-bed terrace home rated EPC D would be £745 more per annum, based on current prices, than an identical C rated home.  A 3-bed semi-detached would be £705 more.

The coldest homes cost two to three times more to heat per square metre than an average EPC C rated home.

For those with the lowest incomes, often with the least control over their property, a cold home is a financially punitive experience.  Conversely, this demonstrates that even moving properties from a D rating to a C rating would transform the household’s economic situation, lifting them from the depths of fuel poverty.

Key message: Energy efficiency programmes must prioritise “invest to save” – fabric first for fuel poor households.

Greener and affordable energy must be two sides of the same coin.

For a fuel poor household, a cold home is a financial burden, a health risk and a barrier to progress.  For the country, cold homes indirectly consume resources of health, local government, and the voluntary sector.  And cold homes are a barrier to achieving our climate goals.

This Committee has argued for a fabric first approach to tackling cold homes.  In this respect, we favour insulation to lofts and cavity walls – well-wrapped buildings – that consume less energy throughout the year.

In our 2024 Annual Report, we were critical of the trajectory of the ECO programme, which had shifted away from this fabric first approach. 

In 2023, only a quarter of the measures were loft or wall insulation.

Between 2022-2024, only 30% of the ECO4 measures were insulation; 70% related to heating systems and controls.

We concluded:

As currently delivered, this programme (ECO) is having limited effect on fuel poverty.

The evidence suggests that “fabric first” creates homes requiring less energy input to stay warm, reduces annual bills, reduces emissions (attacking the fuel poverty gap); and ultimately, may reduce the degree of energy bill support directed at those households.

Insulation programmes, pound for pound, will deliver year on year savings on bills, and a proven return on the investment.  They support the government’s goal is to reduce fuel bills. 

However, for fuel poor households, the benefits of a warmer home extend beyond lower bills.  Their home is healthier and safer.

Our contention is that fabric first delivers lower bills - lower emissions – less demand on the NHS. For the state it may also mean lower subsidy to bills -  a win-win-win-win.

Investment in heating controls and clean energy heat pumps may have a modest impact on bills but are not primarily about addressing fuel poverty.  They are an important part of the modernisation of our energy infrastructure, and the transition to cleaner energy over the next decade and beyond.

Whilst the encouragement of early adopters, and co-payment through government grants help to build capacity of the heat pump industry; it is likely that for most low-income households, the contribution of clean energy to their household will come later, rather than sooner, unless the household has a social landlord delivering this technology as part of a wider package to achieve decent homes standards.  And it must be integrated in such a way as to not increase the bills of low-income and vulnerable households.  Greener and affordable must be sides of the same coin.

8. The Private Rented Sector

Key message: The government’s consultation on improving the energy performance of privately rented homes is welcome and timely.

Tackling fuel poverty is not one, but several, interlinked problems.  We know it is driven by fuel prices.  We know if affects low-income households who vary in composition; and we know it spans all housing tenures.

The policy mechanisms for impacting on different housing sectors therefore vary.  The ECO programme, over many years, has reached owner occupiers of older, lower cost properties, with some success, though rural properties appear to have been less effectively reached.

Social housing providers, generally, have developed substantial investment programmes; some backed by government funding; to improve properties.  The organisation Unlock Net Zero, noted:

The latest annual Sustainability Reporting Standard for Social Housing (SRS) report found that, across 1.9 million social homes, more than 75.6% achieved EPC C or better, 16.2% achieved EPC B…

Some of the 91 housing associations surveyed also reported that more than 80% of their homes were at EPC C and above…

This is evidence of the sustained investment, with this sector largely on target to have all reasonably practicable properties up to a C or better by 2030.

The private rented sector (PRS) remains the laggard on this journey.  The CFP believes that the private rented sector has been allowed to sidestep the necessary upgrading of homes for too long, resulting in an over-concentration of low-income households in cold rented homes.  Urgent action is required.

Among our recommendations, we favour raising the threshold to at least £15,000 (investment in energy efficiency) before a landlord can apply for an exemption from meeting the minimum standards. 

To support landlords’ making this investment, the Committee said in its submission to DESNZ:

we acknowledge that this is a substantial sum for landlords to invest and urge the government to consider tax incentives to offset investment, for example, offsetting energy efficiency expenditure incurred in one year, against profits made over several future years.  Targeted green financing available to landlords is another potential resource to support landlords to afford the required investment to meet new MEES requirements.

The rapid upgrading of homes in the private rented sector would be in keeping with the government’s goal of lifting 1 million people out of fuel by 2030.^{[footnote 4]}

9. Targeting Fuel Poor Households

Key message: A data revolution is needed to reach the right households with cash support or energy efficiency programmes.

A central element running throughout the government’s renewed Fuel Poverty Strategy, MEES regulations for the private rented sector; and Warm Homes Plan, must be value for money.

The government’s resources are not unlimited.  Also, given that, currently, energy efficiency programmes are funded by a levy on household energy bills, bill payers also deserve value for money.

A cross-government approach, involving data sharing and co-ordination with regional and local government, the NHS, local partners and the utility companies, could explore how to accurately identify those households facing fuel poverty and the greatest depth of fuel poverty first, so as to impact on fuel poverty specifically, and achieve wider benefits.

The answer, in part, is good accurate data, necessarily drawn from other public sources.  That data may enable well-targeted energy efficiency programmes – it may enable social housing providers to put those households at the front of their government backed decarbonisation investment programmes. 

It may enable governments to place greater requirements on private landlords where children are present in a rented property with only one adult.

Good data used to tackle a social injustice and achieve tangible outcomes for low-income and vulnerable households, could allay some of the fears about data privacy.

10. The energy transition

Key message: Net zero must not make low-income households worse off than before.

Any path towards net zero which reduces the volatility of energy prices and, ultimately, reduces them in real terms, is to be welcomed.  The steady growth of clean energy infrastructure and installation of new heating systems, solar and smart technology, all have a part to play.

The UK is ahead of most other countries in both reducing emissions, putting itself on a gradual path away from reliance mainly on fossil fuels, to cleaner forms of energy.

Low-income fuel poor households face higher bills proportionately to heat their homes and remain more vulnerable to price volatility.

Reducing the overall price of energy – however desirable – is by no means certain over a five-year horizon and certainly not in the short-term.  However, reducing the demand for energy, by upgrading cold homes, is achievable for many fuel poor households between now and 2030.

The impact can be significant.

In 2023, emissions from buildings (mainly domestic heat and light) contributed 20.2% of emissions.  And the Committee on Climate Change Progress report identifies buildings as contributing over 20% of emission reductions by the end of Sixth Carbon Budget 6, in 2037.

Energy Efficiency of Housing in England and Wales: 2024, published by the ONS (October 2024) noted that in 2024, the average EPC in England was 68 (a Band D), typically emitting 3.3 tonnes of CO2 per year (compared to newer homes emitting 1.3 tonnes per annum).

The data produced by Rightmove (see above) indicated that simply upgrading a 3-bedroom terrace/semi-detached home from EPC D to a C rating, reduced bills by 28-30%.  This implies an above average contribution per dwelling to reducing emissions.

Upgrading the 85% of homes reliant on gas to a C rating would reduce gas demand by 20% alone, according to the Committee on Climate Change. 

Building on the progress made to make homes more energy efficient, starting from a low base, the growth of heat pump installations has been consistent, currently running at 9-10,000 installations per quarter in England, mainly funded by the Boiler Upgrade Scheme and ECO.

Whilst this journey is still in its infancy, every heat pump is a step on the road to net zero.  However, evidence suggests that the quickest way to reduce fuel poverty for a low-income household remains to have a thoroughly well-wrapped home, saving emissions and cutting bills at the same time.  A fabric first approach is consistent with the government’s wider goal of accelerating towards net zero.

The Committee is conscious that low-income households, including the fuel poor, are least well placed to avail themselves of heat pumps and many will rely on 100% publicly funded heat pumps being installed.  In terms of the roll-out of heat pumps, and building the installation capacity, the government may achieve its best value for money by promoting grants which enable more consumers with the means to co-fund the transition to cleaner energy.

11. Future Bills - New tariffs

Key message: Low-income households require trusted intermediaries to support their journey towards net zero and to provide assurance at different stages.

Net zero cannot be achieved at the cost of affordability, if it is to avoid any adverse effect on fuel poverty.

The fuel poor, and those previously in fuel poverty, must be part of the journey of transition. No one wants to see a two-tier nation, where the electric vehicle, smart tech, higher income families move ever closer to low-carbon living, while the poorest third bear more of the costs, with fewer of the benefits.

We would draw the Minister’s attention to this Committee’s research: “Understanding the barriers and enabler to supporting fuel poor households achieve net zero.”

In policy terms, this research identified that for the customer journey to succeed, complexity had to be avoided, or the fuel poor face exclusion.

The report reinforced the need for “cross-sector and cross-department data for more efficient targeting of fuel poor households and to learn from existing programmes.”

It also outlined the importance of end-to-end support for fuel poor households, and for trusted intermediaries at a local level to help households through the delivery of energy efficiency schemes.

Partnerships that match scale with local experience are critical to success. The Committee recently received a presentation from Warmworks which outlined the advantages of the Scottish model, where in partnership with Warmer Homes Scotland, Warmworks provides whole house retrofits to homes in or at risk of fuel poverty.  They are developing similar activity across the UK, including in the North East working with the regional Mayor and local authorities.

Their approach has enabled the creation of apprenticeships, jobs and quality supply chains that can be sustained, providing an end-to-end service that understands the needs of individual homes, communities and buildings.

Our research emphasised humanising the process for those facing real worries and barriers that deter their engagement with well-meaning programmes, so energy efficiency programmes can more effectively deliver results for those who need that help most.

Key message: Vulnerable households are poorly placed to exploit time of use tariffs and face unique energy burdens.

The Committee’s commissioned research Exploring options for improving energy bill equity for fuel poor households, noted that there is a growing inequality, linked to income, in terms of the new innovative tariffs offered to encourage consumers to change their usage patterns. Notably:

The findings also point to increasing divergence between fuel poor households and those more able to access and take advantage of smart time of use tariffs. Incentivising energy use during off peak hours can generate much greater savings in households where smart appliances and significant electrification in the home exists, such as electric vehicles, heat pumps, solar generation and battery storage. This is vastly different in usage and savings potential to a fuel poor household without these goods, who may be self-rationing, and unable to load-shift due to household requirements or working patterns.

The Committee’s research suggested that addressing bill inequity requires trade-offs.  Redistributing the standing charge (moving some of the costs from billpayers to taxpayers); offering discounted unit rates (a social tariff); lump sum deductions from bills, or variations of these, require balancing simplicity for the consumer; administrative costs; efficient targeting and the overall cost to the Exchequer.  The Committee hopes that weighing up those policy options will be fully addressed in the new Fuel Poverty Strategy.

1. Table 3.17 pg 41 Annual Fuel Poverty Statistics Report 2025 https://www.gov.uk/government/statistics/annual-fuel-poverty-statistics-report-2025 ↩

2. https://assets.publishing.service.gov.uk/media/603fc0dae90e077dd13f3f8b/Annual_Fuel_Poverty_Statistics_LILEE_Report_2021_2019_data.pdf ↩

3. https://www.rightmove.co.uk/news/articles/property-news/average-uk-energy-bills-how-to-save-money/ ↩

4. https://www.gov.uk/government/news/home-upgrade-revolution-as-renters-set-for-warmer-homes-and-cheaper-bills ↩