Warm homes: Solving England’s fuel poverty problem

With a revised Fuel Poverty Strategy for England in development, what should be the policy priorities? A new approach is needed, with carefully targeted investment of retrofit spending.

BRE helps the government measure progress on tackling fuel poverty by providing fuel poverty statistics for the Department for Energy and Net Zero. These statistics are produced from data collected in the official English Housing Survey – MHCLG’s continuous national survey of homes managed by a consortium of NatCen Social Research, BRE and CADS. SAP, the government’s model of home energy performance originally developed by BRE, underpins the energy need component of the fuel poverty level calculation.

This article presents BRE’s view on the fuel poverty challenge.

The latest official fuel poverty data for England was published in April with new local authority estimates following in May. Alongside a recent consultation on Fuel Poverty Strategy, what does the data tell us about how the government could tackle cold homes?

The Home Energy Minister, Miatta Fahnbulleh, recently looked back at the energy price crisis of 2022 and explained the importance of the transition to a clean power system: “Energy bills are a central pillar of the cost-of-living crisis because we have no control over fossil fuel markets. We remember 2022. That sinking feeling in our stomach as bills escalated. The powerlessness to stop them…”

Although energy bills have fallen from their peak in late 2022 and early 2023, unaffordable bills remain a stubborn problem for too many UK households. In England, 2.7 million households - just over one in ten - are both:

Living on a low income, after housing costs and required energy spending is taken into account, and are
Living in a home that is expensive to heat compared to other homes of the same size: defined as below Fuel Poverty Energy Efficiency Rating C, under-insulated and/or with a costly-to-run heating system.*

The level of fuel poverty on this official measure - known as LILEE, or Low Income Low Energy Efficiency - improved between 2022 and 2023 but since then progress has stalled. The new statistics show that, in 2023, 11.4% of households were in fuel poverty; in 2024, the estimate is 11.0% of households; and – in 2025 – the figure is projected to be 11.2%.

With such little change expected over the three years, we’re clearly not on track to meet the government’s long-held target to “ensure that as many fuel poor homes as is reasonably practicable achieve a minimum energy efficiency rating of Band C, by 2030.”

The government’s recent Fuel Poverty Strategy consultation and retrofit measures

The government’s Spring Review of England’s Fuel Poverty Strategy consultation recognised that, with a slow rate of progress, new policy thinking is needed.

Fuel poverty has three main determinants: energy efficiency, income, and energy prices. But it’s retrofitting homes with insulation and efficient heating that provides the best long-term solution for both current and future residents of a home. So, key to faster progress will be the Warm Homes Plan national retrofit funding programme, which the government is due to announce full plans for later this year.

To tackle fuel poverty at a faster rate, retrofit funding is needed. Labour’s June 2024 election manifesto committed to an extra £6.6bn of funding over this parliament on top of already-planned spending. Even in times of tight government budgets, that remains a good investment. BRE research identified that the NHS spends more than £500m a year treating respiratory and other cold-related illnesses caused by people living in the very least energy efficient homes.

Alongside, or as part of the Warm Homes Plan, there will be thinking on the future of ECO, the obligation on energy suppliers to fit energy efficiency measures in low-income households. The scale and importance of ECO is not always recognised: with spending of £1bn/year, ECO accounted for around 80% of the 421,000 measures installed under UK government home energy efficiency schemes in 2024. The scheme is due to begin its next four-year phase in April 2026.

Regional variation title

Regional variation

Across England there is significant variation in levels of fuel poverty. New estimates have just been published of fuel poverty levels in 2023 across English local authorities.

The West Midlands – at 16% in 2024 - is the region with the highest rate of fuel poverty. That’s because, in England, it has both the lowest median income (after housing costs, and adjusted to account for the number of people in the household) as well as the joint lowest median Fuel Poverty Energy Efficiency Rating for homes. The West Midlands council area of Stoke on Trent is the local authority with the highest estimated levels of fuel poverty in the country, at 21% in 2023.

Regional variation 2

The challenge, though, is that even in regions with a high concentration of fuel poor homes, reaching the right homes can be difficult. The West Midlands – as well as having the highest share of fuel poor homes in England - also sees the greatest variation in levels of fuel poverty across its communities. In the region, there is an astonishing 16 percentage point difference between the local area with the highest levels of fuel poverty, and the local area with the lowest.

Targeting support

Delivering higher levels of retrofit is not just about total spending. Also key is making sure that government schemes are fitting energy efficiency measures in the homes of people who are in fuel poverty and in homes where the measures can have the most impact.

There’s clearly progress to be made on improving targeting of retrofit programmes to alleviate fuel poverty. The Annual Fuel Poverty Statistics estimate that, “if no other factors had changed” energy efficiency progress reduced fuel poverty by up to 59,000 English households between 2023 and 2024,** around 2% of fuel poor households.

Councils and strategic authorities – who play a vital role in energy efficiency scheme delivery - need capacity and support to use the latest data to target and reach fuel poor homes. And nowhere is the fuel poverty data challenge more acute than in the need to identify people living in the very least energy efficient properties: those in the lowest, Energy Performance Certificate (EPC) E, F and G bands.

These homes make up a small proportion of the housing stock (9% of homes and 8% of households) and so can be difficult to find. But, at the same time, they are essential to reach: households living in these homes make up 18% of the fuel poor and can face very high bills. In 2024 over half (52%) of the total fuel poverty gap – the £1.1bn total reduction of energy costs needed across all English fuel-poor households – was accounted for by households living in this relatively small number of cold homes.

One solution is to make sure that councils and homeowners have access to EPC ratings for all homes. BRE has previously made the case for “provisional EPCs” to be produced using advanced housing stock modelling. These wouldn’t replace the official EPC when one is required, but would provide an initial rating and recommendations for the third of homes that do not have the certificate. This approach would particularly benefit people who have not moved house for many years and who, evidence suggests, are more likely to live in the least energy-efficient properties.

Targeting fuel poverty support is not just about finding the coldest buildings: we also need to focus on finding the families that most need help. Vulnerable households – with a resident who is elderly, under five years old, or living with long-term ill-health - can suffer the worst health effects of cold homes. In 2024, vulnerable households were over 50% more likely to be living in fuel poverty than households not in this category.

The data and targeting challenge to reach vulnerable, fuel poor households is complicated by confidentiality and data protection rules around health data. But some stakeholders have argued the need to support these households should take precedence: the official, but independent, Committee on Fuel Poverty says, “In our view, the need to protect the health, wellbeing and financial security of those vulnerable consumers should justify a rethinking of data protection rules.”

Lastly, we need research: data gathering and information sharing about what works well ‘on the ground’ to help overcome the complex barriers to retrofit particularly among home owner-occupiers.

Beyond cold homes

Effective policy delivery to solve the fuel poverty problem is vital, not least because there are other challenges that we need to address in homes, beyond cold. With warming temperatures from climate change, home overheating becomes more of a risk. And damp remains an invidious problem for too many households. These issues – alongside other hazards in homes - impose their own costs in ill-health and human misery, particularly for low income and vulnerable households.

Between now and 2030, an ambitious rethink of the Fuel Poverty Strategy, targeting the worst, coldest homes first, and making the best use of data can show the way: towards the entirely achievable delivery of healthy and safe homes for families in England at all income levels.

Sources

*For fuel poverty analysis, the estimate of energy costs used in the Fuel Poverty Energy Efficiency rating, as well as home energy efficiency, also takes into account Warm Homes Discount support from the government that helps with energy bills for low income households.

**Annual Fuel Poverty Statistics report 2025 “Up to” as this figure includes households whose bills were reduced by Warm Homes Discount funding as well as those receiving energy efficiency improvements in their homes.

David Weatherall, Head of Policy, has long worked with leading organisations and regional authorities on fuel poverty policy, programme design and impacts. At BRE he is excited to be learning from the organisation’s decades-long, unrivalled expertise reporting on and understanding the UK housing stock.